50% Black + 100% Black 

PMS 540 + 100% Black 

White (version for reverse) 

2 0 0 7 A n n u A l R e p o R t p R o d u c t s B e y o n d p R i n t i n g 


2 0 0 7 A n n u A l R e p o R t 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 

50% Black + 100% Black 

5 A Message from the public printer 

PMS 540 + 100% Black 6 online guide to House and senate Members | Searchable Website 

White (version for reverse) 8
e-passport | Secure Documentation 

10
 gpoExpresssM | Low-cost Print Solution 

White (version for reverse) 

12
 gpo’s Federal digital system—Fdsys | Preserve & Authenticate Government Information 

14
 2007 Financials 

16
 government performance and Results Act—gpRA 

P r o d u c t s B e y o n d P r i n t i n g Case studies of customer challenges and GPO solutions. 


K e e p I n G A M e R I C A I n F o R M e D 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 

GPO has moved to a leadership role in digital communication. 

the u.S. Government printing office’s (Gpo) mission for more than 146 years has been 

Keeping America Informed on the three branches of the Federal Government. Accomplishing 

this task has meant keeping pace with and developing new technologies. the men and women 

of Gpo have met this challenge of the changing technological advancements in our nation’s 

history. Congress, the courts, and Federal agencies turn to Gpo for the products that will give 

them the latest technology to communicate with the American public. 

In 1861, the year of Gpo’s founding, there was an experimental communications technology 

called the telegraph — it was unreliable and largely belonged to the technology elite in the 

military. But it moved information at a remarkable 4 bits a second — the speed of a tapping 

human finger. elsewhere in 1861, the reliable state of the art was handset type for a Bullock or 

rotary press. It was that technology that produced lincoln’s emancipation proclamation. the 

linotype arrived on Gpo’s plant floors in 1904 to print president Woodrow Wilson’s declaration 

of war against Germany. the first offset presses arrived at Gpo in 1926 and electronic type 

began to replace the linotype in the 1960s. 

there have been many decades where Gpo has installed new technologies to better serve 

its customers. In the 21st Century, the pace of change has quickened from decades to days 

to hours, and Gpo has moved to a leadership role in the digital revolution and stepped up 

to the opportunity to better serve its Federal customers and the American people. new Gpo 

innovations such as e-passports, online capabilities, advanced smart cards, authentication tools, 

and document storage and retrieval, enable Federal agencies, as senders, and the American 

people, as receivers, to become more fully engaged in the process of American Democracy. 

Gpo welcomes you to this 2007 Annual Report and is pleased to introduce you to Products 

Beyond Printing — a set of case studies of customer challenges and opportunities — and 

Gpo service and solutions. 

	  
2 0 0 7 A n n u A l R e p o R t A M e S S A G e F R o M t H e p u B l I C p R I n t e R 

FISCAl yeAR 2007 MARKeD A neW BeGInnInG FoR Gpo.
 

over the past five years we transformed this venerable 

agency from a traditional printing factory to a world 

class, state-of-the-art digital business, dedicated to 

meeting the 21st century information product needs 

of the Government and the public. the record of 2007 

shows that with the plan we developed, and with the 

hard work and support of our talented employees, Gpo 

was put on the path to increase access by the American 

people to digital and other information products of 

the Federal Government, and to unlock our potential 

for the future. Indeed, in 2007 we began to see the full 

results of our transformation, and what the new Gpo is 

capable of achieving today. 

With the print marketplace shifting from analog 

to digital technologies, Gpo’s customers in Congress, 

Federal agencies, and among the public require 

dynamic and creative solutions to meet their everchanging needs. In 2007, we achieved major milestones 

in customer service and product development for 

the Federal marketplace in printing and information 

management. 

We responded to the nation’s explosive demand 

for the new e-passport by more than doubling previous 

production. We implemented a new, flexible program 

for meeting the document needs of Federal agencies 

through a well recognized national vendor. We developed an information rich online guide to House and 

Senate Members for Congress. We also readied our new 

digital platform, Gpo’s Federal Digital System (FDsys), 

which will be a digital repository for all Federal documents, for its expected public release in 2008. 

these innovative contributions to the Government’s 

information toolkit are emblematic of today’s Gpo, a 

modern, efficient, and effective partner in providing 

a broad range of products beyond printing. they 

and other services are just some of the examples of 

how Gpo will fulfill its mission in Keeping America 

Informed in the digital age. 

our original objective in transforming Gpo was 

to ensure that it survives. We achieved this goal and 

more, and now Gpo is beginning to thrive. In 2007, 

we recorded net income for the fourth consecutive 

year, including another positive adjustment to long-term 

workers’ compensation liability. 

We increased overall revenues to levels that have 

not been experienced at Gpo for more than a decade, 

principally as the result of e-passport work produced 

through our security and intelligent documents business unit, as well as other in-plant operations. efforts 

to economize and increase efficiency also contributed 

measurably to our financial results. our earnings for the 

year will replenish capital that had been reduced during 

the prior decade to offset financial losses, helping 

provide us with the ability to make essential technology 

investments as well as fund necessary product and 

service improvements. 

the dedicated men and women of Gpo deserve 

credit for the results of 2007. Gpo’s skilled employees 

have always embraced and advanced technology to 

carry out our mission for the Government and the 

public we serve. they understand the importance of 

transforming Gpo for the 21st century, and of moving 

to the next level of technology. 

the employees who work in our passport facility 

deserve special recognition for increasing production to 

meet the nation’s demand, and others throughout Gpo 

who contributed to our operational and financial results 

are equally deserving of praise. With our finances now 

on a sound footing, it’s time to fully implement plans for 

providing Gpo’s employees with the training they want 

and need to excel in their jobs. this will ensure that 

Gpo excels in performing its mission, as we did in 2007 

and as we will continue doing in the years to come. 

under the leadership of public printer Bruce R. 

James and Acting public printer William H. turri, Gpo 

reached these levels of success in 2007. I am honored 

to be in a position to build upon the success of the past 

year. It is a privilege to have been selected by president 

George W. Bush and confirmed by the u.S. Senate as 

the nation’s 25th public printer. As the leader of Gpo, 

I look forward to working with our talented employees 

to continue to make this agency thrive as a leader in 

the ever changing digital world. 

Robert C. tapella 

Public Printer of the United States 

	  
2 0 0 7 A n n u A l R e p o R t 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 

Customer 

Members of the united States 

Congress. 

Challenge 

How to better serve Members of 

the u.S. Congress, officers and 

officials, and their staffs, who are 

already stretched for time and 

need accurate information in an 

easily accessible format. 

Solution 

Create a useful electronic supplement to the traditional, printed 

Congressional Pictorial Directory, 

allowing, with a simple stroke of 

the keyboard, an online user to 

retrieve photographs and biographical and other information 

about all current Members of the 

110th Congress from one central 

Online Guide to House 

point in an easily searchable 

format. 

and Senate Members 

Understanding the Customer Creating Real Benefits 

After consultations with the n For congressional staffs, the 

offices of the Secretary of the Online Guide provides a central 

Senate, the Clerk of the House point of access to multiple 

of Representatives, and the Joint databases for information about 

Committee on printing, Gpo’s all current Senate and House 

team designed the Online Guide Members, officers, and officials. 

to House and Senate Members so n the simple Online Guide allows that Members’ offices have access constituents to begin broadly 

to submit updates at any time. searching for their Senators or to ensure secure access, registra- Representatives and then to tion and log-in are required and narrow their search by selecting security checks are in place to from a range of Member types, verify that the person signing in is party affiliations, and other a valid user. categories. 

n Allows House Member offices How It Works and the Senate administrative With ongoing client input,
 

Gpo’s Congressional publishing offices to submit new photos 
 

Services, Creative Services, and and updates directly to Gpo,
 

which are then used for both Digital Media Services units the Online Guide and the implemented the latest technology and publishing trends to printed Congressional Pictorial 

create a first-class, easy-to- Directory. 

navigate Website. 

about all current Senate and House 
 

A central point of access to 

Step 1 

Click on the “Search the Guide” button. 

http://www.memberguide.gpoaccess.gov/ 

multiple databases for information 

Members, officers, and officials. Step 2 

Select Member Type “Representative”, 

then Category “Name” and type in 

the Chairman’s name, click Search, 

and you will retrieve the following 

information regarding your search: 

name, title, party affiliation, hometown, 

district, and terms in office. 

Step 3 

Another click and you can retrieve 

detailed biographical information on 

the Chairman. 

 	  
and keep current with increasing 

demand for passports from the 

American public. 

Solution 

the new e-passport is being 

produced by Gpo in close 

collaboration with the u.S. 

Department of State. 

Understanding the Customer 

the first u.S. e-passport was 

issued to Secretary of State Colin 

powell in 2005. Gpo reached a 

significant milestone in May 2007, 

when its entire passport production operation was converted 

to e-passports. In fiscal year 2007, 

Gpo produced approximately 

20 million passports. that’s an 

increase of more than seven 

million from fiscal year 2006. 

	  

How It Works 

An electronic chip embedded 

in the cover of the e-passport 

contains the same information 

printed in a non-electronic one: 

name, date and place of birth, 

gender, dates of passport issuance 

and expiration, photographic image of the traveler, and passport 

number. numerous security 

features protect the information 

contained in the e-passport— 

some are visible and some 

are not. Gpo produces blank 

e-passport booklets, which are 

personalized at the Department of 

State with each traveler’s specific 

information. 

Creating Real Benefits 

new regulations passed in 2007 

require u.S. citizens to present 

a passport when traveling by 

air to and from Canada, Mexico, 

and the Caribbean. these new 

requirements added substantially 

to the demand for u.S. passports. 

to help the State Department meet 

the new demand, Gpo added 

personnel and resources, working 

around the clock and increasing production to a high of 2.9 

million passports a month. Gpo 

succeeded in completely filling 

all Department of State orders 

in fiscal year 2007—dramatically 

ramping up e-passport production 

in order to do so. In August 2007, 

Congress gave Gpo approval to 

further expand e-passport production by opening a second secure 

production facility in 2008. 

2 0 0 7 A n n u A l R e p o R t 

The U.S. e-Passport 

features multiple layers 

of security to protect 

an individual traveler’s 

personal information 

and photograph. 

GPO is a global leader in 

developing and producing

Federal Security Credentials. 

e-Passport 

 

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 

Customer 

the united States Department 

of State. 

Challenge 

Help the u.S. Department of State 

enhance security at America’s 

ports of entry, comply with new 

international standards for the use 

of electronics and biometric data, 
1100 

GPOExpress 

SM 

This product delivers unique 

printing services ideal for agencies 

with regional operations. 

Customer 

thousands of print buyers in 

Federal agencies of the u.S. 

government and u.S. Courts. 

Challenge 

How to provide convenience 

to communications managers 

in the Federal government for 

small printing jobs by delivering 

digital technology and quick 

turnaround for their agencies, 

needs and capture these Federal 

publications for continued access 

through the Federal Depository 

library program (FDlp). 

Solution 

Gpo’s new public-private sector 

program, GpoExpressSM, with 

Fedex Kinko’sSM provides unique 

printing services and solutions 

by enabling Federal government 

personnel to order from any 

Fedex Kinko’sSM print Center, 

day or night, at any of the 1,600 

locations in the u.S. 

Understanding the Customer 

this program is ideal for agencies with regional operations, 

especially those in remote areas. 

using the new GpoExpressSM 

Card, agencies receive significant 

discounts and benefits on printing 

and finishing needs. Services 

provided include: 

n	 Walk-in access at 1,600 Fedex 

Kinko’sSM locations worldwide; 

n	 ordering options available 

online, in person or by phone; 

n	 High-quality printing 

services, including: digital 

color and black and white 

copies, business cards, invitations, brochures, manuals, 

presentations, newsletters, 

and flyers; 

	 

2 0 0 7 A n n u A l R e p o R t 

n	 Binding, mounting, laminating 

and more finishing services; 

n	 Signs and graphics, including: 

digital oversize printing, 

full-color vinyl banners, posters, back-lit and metal-yard 

signage, and auto magnets; 

n	 Direct mail, litigation copying 

and document scanning; 

n print-on-demand programs; 

n	 Access to a wide range of 

Fedex express® and Fedex 

Ground® shipping services. 

How It Works 

GpoExpressSM integrates four 

major technologies to make the 

system work in a timely and cost 

efficient manner: 

n	 An online ordering system 

allowing agencies to enter 

specifications for a majority of 

orders, view an online proof, 

receive an online estimate for 

the order, and determine the 

location(s) where the order(s) 

will be fulfilled. 

n	 An “eView” feature allows 

web access to all transaction 

data within 24 hours post 

purchase for up to three years 

from date of invoice. 

n	 A “DocCatalog” feature enables 

agencies to store documents 

on a secure server for both 

easy ordering and for potential 

disaster recovery purposes. 

n	 All printed documents 

are captured through the 

GpoExpressSM programs’ 

automatic upload and harvesting features – and made a 

permanent part of Gpo’s 

FDlp which preserves and 

makes available information of 

public value. 

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 

Creating Real Benefits 

GpoExpressSM provides a convenient, low-cost “quick-print” 

solution for Federal government 

customers — which mirror 

the ease and convenience that 

private-sector companies enjoy. 

www.gpo.gov/gpoexpress/index.html 

The Federal Emergency 

Management Agency 

(FEMA) is using 

GPOExpressSM to 

cost-effectively manage 

communications during 

response and recovery 

efforts following a 

national incident. 

The Small Business 

Administration (SBA) 

is creating high-quality 

marketing materials 

for more than 100 

field offices to develop 

localized print materials 

to meet the needs 

of target audiences. 

GPOExpressSM allows 

us to provide online 

templates with fillable 

fields. 

11 
1

2 0 0 7 A n n u A l R e p o R t 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 

Customer the general public and private Information contained within 

the united States Congress, enterprise expect that much FDsys will include text, graphics, 

united States Courts, Federal from their information sources. audio, and video files and will be 

Government agencies, and American consumers should available for viewing on multiple 

other groups such as the 9/11 expect no less from the Federal devices, such as computer moniCommission, which produce the government. FDsys design tor, pDA, cellphone, and e-mail. 

official documents of government, is being driven by feedback 

and the American public who are from Gpo’s key stakeholders Creating Real Benefits 

entitled to free access to the same — Congress, Federal agencies, the benefits of FDsys are farofficial documents via the Federal FDlp members, contractors, reaching, both internally and 

Depository library program vendors, general public, and Gpo externally to Gpo. 

(FDlp). 

Challenge 

With constantly changing technologies for document storage, 

employees. Beta development 

was launched in 2007 and further 

development of the system is 

occurring in a series of expected 

releases for 2008. 

n	 Congress and Federal agencies 

will have a single electronic	 

system and method to submit 

files to Gpo. 

imaging and retrieval, how does n	 Agencies will also be capable 

Gpo provide a simple electronic How It Works of monitoring and managing	 

method for the producers of FDsys supports Gpo’s transfor­ many procurement processes 

official Government documents mation from an environment in an online environment. 

to disseminate information and 

allow enhanced searchable access 

for the American people. 

Solution 

Gpo’s Federal Digital System — 

“FDsys.” Gpo is developing an 

focused on printed documents 

and printing to one focused on 

content, in which digital content 

may be created and submitted, 

and then preserved, authenticated, managed and delivered 

upon request. the key functions 

n	 FDsys will verify that the 

information accessible to 

the public is from a trusted 

source and assist in easily 

identifying multiple versions 

of publications. 

advanced digital system capable include: n	 FDsys will ensure that the 

of managing information in 

digital form that will preserve, 

authenticate, and facilitate 

access to official Government 

documents — in print and digital 

form — from all three branches 

of the u.S. Government. 

Understanding the Customer: 

The Federal Agencies and 

the American People 

With the rise of the electronic age, 

n	 publishing documents — 

the u.S. Congress and other 

agencies will be able to submit 

files and orders to Gpo for 

printing, electronic distribution, 

and inclusion in the FDlp; 

n	 Searching for information — 

the public will have a 

comprehensive site to find 

authentic, published 

Government information; 

FDlp and American public 

have access to authentic	 

official Government information 

through enhanced search	 

features. 

n	 Information contained in 

the system will be available 

for viewing and will be downloadable in multiple formats, 

including screen and print 

optimized. 

people now expect easy, immediate online access to information. n	 preserving information — 

the preservation function of 

FDsys will ensure public 

access to information even as 

technology changes, including 

the digitization of printed 

products. 

FDsys will preserve,

authenticate, provide version 

control and facilitate access 
 

to official Government 

documents. GPO’s Federal Digital 

System—FDsys 

1	 	 1 
Summary Balance Sheets (in thousands) 00 00 

Assets 

Current Assets 

Fund balance with Treasury $ 273,446 $ 229,805 

Accounts receivable, net 150,977 109,547 

Inventory, net 29,733 13,093 

Prepaid expenses 3,958 1,688 

Total current assets	 $	 458,114	 $	 354,133	 

Property, plant and equipment, net 67,600 56,894 

Total Assets	 $	 525,714	 $	 411,027	 

Liabilities and Net Position 

Current Liabilities 

Accounts payable & accrued expenses $ 109,324 $ 84,008 

Deferred revenues 81,715 69,559 

Accrued annual leave 9,813 9,586 

Total current liabilities $	 200,852 	 $	 163,153	 

Other liabilities 

Workers’ compensation liability 66,723 69,951 

Warranty liability 4,833 — 

Total Liabilities	 $	 272,408 	 $	 233,104	 

Net position 

Cumulative results of operations 

Retained earnings $ 108,164 $ 17,281 

Invested capital 92,879 92,879 

Unexpended appropriations 52,263 67,763 

Total Net Position	 $	 253,306	 $	 177,923	 

Total Liabilities and Total Net Position	 $	 525,714	 $	 411,027	 

FinAnciAls 

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

increased to $257.2M in 2007 from $190.9M in 2006 or an increase of 34.7%. Cash increased by $43.6M, or 19.0%. 

In fiscal 2007, the Gpo recorded a $3.2M non-cash reduction in the estimate of its future long-term workers’ compensation 

liability. the expected future liability at the end of 2007 was $66.7M, compared with $70.0M at the end of 2006. For the third 

consecutive year Gpo ended the year with positive retained earnings. Retained earnings were $108.2M at the end of fiscal 2007. 

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 fiscal year 2007 (october 1, 2006 through September 30, 2007) the Gpo received a clean audit opinion on its consolidated 

financial statements from KpMG llp. 

For the fourth consecutive year, Gpo experienced positive financial results. Gpo earned a contribution to new investment 

of $87.7M in fiscal 2007, before other expenses, compared with $9.8M in fiscal 2006. Revenue from operations increased 30.4% 

to $939.1M from $720.4M. the major factor driving the operating revenue increase was the increased demand for e-passports. 

operating costs increased 19.8%, to $851.5M from $710.6M, due mainly to an increase in e-passports materials cost. 

In fiscal 2007, the Gpo had an overall positive contribution of $90.9M which was comprised of $87.6M from operations and 

$3.2M from a reduction in the future long-term workers’ compensation liability. In fiscal 2006 the total contribution was $16.0M. 

Approximately $62M of the $87.6M contribution from operations is for uses that have been previously approved by the appropriate 

parties. A total of $39.5M of the $62M relates to capital projects, including the development and fit-out of the new secure 

production facility ($27.8M) and the development of FDsys (approximately $11.7M) which is partially supported by appropriated 

funds. the remainder of the $62M, $22.5M, is being used to purchase inventory for the production of the e-passport. 

Cash provided by operations improved by $51.5M over the prior year. In 2007, Gpo generated $81.5M from operations 

compared to $30.0M in 2006. the Gpo made investments of $22.4M and committed an additional $33.9M to future investment in 

fiscal 2007, compared to the $8.3M expended in fiscal 2006. 

Summary Statements of Cash Flows (in thousands) 00 00 

Cash Flows from Operating Activities 

Net Income	 $	 90,883	 $	 15,961 

Provided by operating activities: 

Depreciation and other $ 8,847 $ 7,565 

(Increase) decrease in current assets (57,485) (7,860) 

Increase (decrease) in current liabilities 37,698 20,508 

Workers’ compensation liability (3,228) (6,171) 

Warranty liability 4,833 — 

Total adjustments	 $	 (9,335)	 $	 14,042	 

Net cash provided by operating activities	 $	 81,548	 $	 30,003 

Cash flows (for) Investing Activities	 	 (22,407) (8,287) 

Cash flows (for) from Financing Activities	 	 (15,500) 1,378 

Net Increase in Cash Balance	 $ 	 43,641	 $	 23,094	 

Financial Results (in thousands) 00 00 Major Changes 

Revenue 

Plant $ 144,482 $ 145,714 

Passports 241,490 43,739 197,751 

Customer Services 485,320 469,928 15,392 

Publication and Information Sales 21,585 24,756 

Library Services and Content Management 29,286 27,684 

Other 16,945 8,558 

Total Revenue	 $ 939,108 	 $ 720,379 

Expenses 851,453 710,589 

Net Income From Operations	 $	 87,655 	 $	 9,790 

Planned Uses of Net Income 

Federal Digital System (FDsys) $ 11,700 

Secure Production Facility (SPF) 27,800 

Passport Materials Inventory 22,500 

Net Income after Planned Uses $ 25,655 

Percent of Revenue 2.73% 

 	  

2 0 0 7 A n n u A l R e p o R t 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 7 A n n u A l R e p o R t 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 

GoVeRnMent peRFoRMAnCe AnD ReSultS ACt — GpRA 

Gpo’s strategic planning and n	 provide the public with 


performance measurements perpetual, free, and ready 


comply with the spirit of the access to all documents 


Government performance and information products 


and Results Act (GpRA). to within the scope of FDlp 


this end, Gpo has employed in partnership with the 


its Strategic Vision for the FDlp libraries. 


21st Century as a catalyst for 


developing five agency goals: n	 provide the public with 


Federal information 

n	 provide Congress and products and services 


Federal agency customers through improved 


with improved expertise in publishing and 


printing, publishing, and dissemination services. 


digital services. 


n	 Develop a Gpo culture 

n	 Secure the plant, that rapidly adopts best 


equipment and human practices to run an efficient 


resources needed to and effective operation. 


provide the services and 


products our Federal By doing so, the Gpo has 


customers need. postured itself to fulfill its 


mission and to Keeping 


America Informed. 


GPO’s strategic planning and 


performance measurements comply with GPRA. 


 Gpo’s 2007 Annual Report has been designed, written, and printed by u.S. Government printing office employees. Video produced by Rick Steele. 


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50% Black + 100% Black 

PMS 540 + 100% Black 

White (version for reverse) 

White (version for reverse) 

7 3 2 N o r t h C a p i t o l S t r e e t , N W 

W a s h i n g t o n , D C 2 0 4 0 1 0 0 0 1 
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 I F I N A N C I A L Y E A R I N R E V I E W 

F i s c a l Ye a r s 2 0 0 7 a n d 2 0 0 6 ( 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 ) 

UNITED STATES GOVERNMENT PRINTING OFFICE
 

FY 2007 Financial Year in Review — Table of Contents 

I. Management’s Discussion and Analysis (Unaudited) ..................................................................................2
 

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

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

Financial Results for Fiscal Year 2007.....................................................................................................................6
 

Performance Measures ............................................................................................................................................9
 

Operating Performance Measures .......................................................................................................................9
 

Financial Performance Measures .........................................................................................................................9
 

Possible Future Effects of Existing Events and Conditions .................................................................................. 10
 

Fiscal Year 2008 Projections .................................................................................................................................. 11
 

II. Inspector General’s Report........................................................................................................................12
 

III. Independent Auditors’ Report ...................................................................................................................16
 

IV. Consolidated Financial Statements.............................................................................................................30
 

Consolidated Balance Sheets................................................................................................................................. 31
 

Consolidated Statements of Revenues, Expenses, and Changes in Retained Earnings ....................................... 32
 

Consolidated Statements of Cash Flows ............................................................................................................... 33
 

Notes to Consolidated Financial Statements ...........................................................................................34
 

1. Summary of Significant Accounting Policies..................................................................................................... 34
 

2. Fund Balance with Treasury.............................................................................................................................. 39
 

3. Accounts Receivable, Net................................................................................................................................... 40
 

4. Inventory, Net ....................................................................................................................................................40
 

5. Prepaid Expenses .............................................................................................................................................. 41
 

6. General Property, Plant and Equipment, Net ................................................................................................... 41
 

7. Accounts Payable and Accrued Expenses ......................................................................................................... 42
 

8. Deferred Revenues............................................................................................................................................. 42
 

9. Workers’ Compensation Liability....................................................................................................................... 43
 

10. Commitments ................................................................................................................................................... 43
 

11. Contingencies................................................................................................................................................... 44
 

12. Net Position......................................................................................................................................................45
 

13. Appropriated Funds......................................................................................................................................... 46
 

14. Employee Benefit Plans................................................................................................................................... 48
 

15. Concentration of Credit Risk........................................................................................................................... 49
 

16. Major Customers ..............................................................................................................................................49
 

17. Voluntary Separation Incentive Program ........................................................................................................ 50
 

18. Regional Operations ....................................................................................................................................... 50
 
2. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review Fiscal Years 2007 and 2006 2

SECTION I 

Management’s . 

Discussion. 

and Analysis 

(Unaudited) 

As of September 30, 2007 

. 

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 monitors their internal control systems. 

and 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. 

— UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
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. 

146 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-theart 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 comprise 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 for, in partnership with . 

Federal Depository Libraries, 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. 

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,. 

DC. 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 facility, is one of the largest. 

information processing, publishing, and. 

distribution centers in the World. 

The vast 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 (e.g., passports), blank. 

paper and paper products (e.g., duplicating paper), 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 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. 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. 

Congress has occasionally made. 

no-year and multiyear appropriations. 

available to the Agency for special purposes...For example, appropriations have. 

been made for building improvements,. 

security enhancements, and workforce. 

retraining. Congress appropriated $2. 

million ($1,980,000 after rescission) to. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 3 
Section I: Management’s Discussion and Analysis 

the GPO Revolving Fund for workforce. 

retraining in fiscal year 2006. An . 

additional $1 million was appropriated. 

for workforce retraining in fiscal year. 

2007...Congress also authorized the. 

transfer of $5.7 million in prior year . 

appropriations to the GPO Revolving. 

Fund to help finance an estimated shortfall of approximately $10.4 million in the. 

CP&B appropriation for fiscal year 2007.. 

The remaining shortfall of approximately. 

$4.7 million has been funded from. 

retained earnings of the revolving fund. 

on a temporary basis until appropriated. 

funds are available. 

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. 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. Customers reimburse the GPO Revolving Fund. 

for these products and services through. 

a system of rates and prices that recover. 

costs. Annual CP&B Appropriations fund. 

the cost of the products and services provided by Plant Operations to Congress. 

The legislative workload demands. 

that will be placed with GPO 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 printing. 

requirements exceed the annual funding provided by Congress, GPO uses the. 

Revolving Fund to temporarily fund the. 

shortfall until sufficient appropriated. 

funds are available. 

Generally, the amount of annual. 

CP&B Appropriation has been adequate. 

to cover the costs of GPO services to. 

Congress. However, an estimated shortfall. 

of around $10.4 million was projected for. 

fiscal year 2007. 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 three years. The CP&B. 

Appropriation decreased from $90.6 million in fiscal year 2004 to $88.0 million. 

in fiscal year 2007. As discussed earlier,. 

Congress approved the transfer of $5.7. 

million in prior year appropriation balances to the GPO Revolving Fund to help. 

offset the potential CP&B shortfall of. 

$10.4 million for fiscal year 2007. 

n Security and Intelligent Documents 

This business unit works with other Federal agencies to assist in the safe and secure design, production, and distribution. 

of security and intelligent documents.. 

These security products incorporate. 

electronic and other fraud and counterfeit protections. Their principal product. 

is passports for the U.S. Department of. 

State. GPO plans to open a new passport. 

production facility at a secure, remote. 

site in 2008. This expanding business. 

line is expected to produce additional. 

sensitive documents in the future, such. 

as smartcards, immigration forms, PKI. 

(Public Key Infrastructure) electronic. 

certificates for credentialing, and traditional security documents as well as. 

those containing embedded electronics.. 

Customers reimburse the Revolving Fund. 

for products through a system of rates. 

and prices. 

n Digital Media Services 

This business unit provides Web site. 

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. 

Federal Digital System (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. 

Web site 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 Agency Strategic. 

Teams (ASTs) 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. Customer Services had 15. 

regional offices, 6 ASTs, and 8 National. 

Account Managers providing services to. 

customers as of September 30, 2007. 

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. 

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’s online U.S.. 

Government Bookstore and one traditional bookstore located at the Central. 

4. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section I: Management’s Discussion and Analysis 

Office. Although intended to be selffunding, 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. 

scale of operations has been repeatedly. 

downsized to lower operating expenses. 

n 	 Agency Distributions 

This business unit provides publication storage and distribution services. 

to Federal agencies through the Laurel. 

Distribution Center and the Pueblo Distribution Center. Customers reimburse. 

GPO through a system of rates designed. 

to recover all cost, including depreciation and overhead. 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 Appropriation funds. 

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 1,257 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. 

Management Initiatives to 

Improve Agency Operations 

A transformation program is underway. 

at GPO 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, continues to. 

serve 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 decisionmaking, 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. 

called FDsys that is being developed... 

The FDsys will 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. 

federal digital information 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. 

The FDsys will replace current GPO 

Access functionality with the first public release in late 2008. The public will benefit. 

from the more advanced search and retrieval capabilities, including the ability to. 

search both full text content and metadata. 

fields. Content and metadata will be available for downloading through the FDsys. . 

Future releases will provide customization. 

and alerting capabilities. 

n 	 Refocusing Customer Services 

Customer Services provides Federal. 

agencies with traditional printed products through private sector vendors, using GPO’s experience and buying power. 

to create the best value for taxpayers... 

Customer Services has been working. 

with their customers to offer 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 ASTs 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, Web site design and hosting, rich media, and print-on-demand. 

The GPOExpressSM Program commenced operations in 2006. The program. 

empowers customers and realizes cost. 

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. 

The GPO Online Paper Store commenced operations in 2007. GPO teamed. 

up with a worldwide paper distributor. 

to develop the GPO Online Paper Store. . 

All Federal Government organizations. 

can purchase environmentally friendly,. 

xerographic copier paper throughout the. 

continental United States using this Webbased online system. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006	  
Section I: Management’s Discussion and Analysis 

n 	 Expanding Digital Services 

Digital Media Services, a new business. 

unit, 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 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 Federal. 

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 	 Investing in Information 

Dissemination Services 

About 224,000 titles were available to. 

the public on GPO Access at the end of. 

fiscal year 2007. GPO Access users made. 

an average of 37.9 million retrievals. 

and 2.3 million searches every month. 

during fiscal year 2007. GPO invested. 

about $2.5 million in funds from the S&E. 

Appropriation for 2004 to improve GPO 

Access. System enhancements included. 

increased storage capacity, stronger . 

security, and improved user performance. This major project is being accomplished with procurement assistance. 

from GovWorks, a Federal acquisition. 

center. Almost $2.1 million of the $2.5. 

million obligated was expended as of. 

September 30, 2007. Plans are underway to expend the remaining balance of. 

$403,000 during fiscal year 2008. 

n Modernizing Agency 

 Information Systems 

GPO launched the GPO Enterprise 

Program in 2004 to replace outdated. 

legacy systems. This major Information. 

Technology (IT) project has been. 

progressively implementing modern. 

application systems that support GPO. 

business and support units. Phase 2 of. 

this modernization project commenced. 

in 2007. This project includes the. 

acquisition of an agency-wide Oracle. 

Enterprise License which will allow GPO. 

to streamline the acquisition process and. 

provide best priced standards-compliant. 

Oracle products for other Oracle based. 

projects. 

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 2,291 employees at. 

the end of fiscal year 2007. 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 to satisfy the Federal Government’s needs in the digital information. 

technology world of the 21st century. 

n 	 Retraining the Workforce 

Congress appropriated $2 million in. 

fiscal year 2006 and $1 million in fiscal. 

year 2007 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 

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 in fiscal year 2006 and avoided. 

an estimated $8 million in recurring. 

annual costs for personnel compensation and benefits. No further workforce. 

reductions were necessary during fiscal. 

year 2007. The scheduled opening of the. 

planned Secure Production Facility in. 

2008 will likely cause a modest increase. 

in the overall size of the GPO workforce.. 

The new site will require production,. 

warehousing, security, and administrative. 

support personnel. 

Financial Results 

for Fiscal Year 2007 

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, 2007. 

Consolidated Statements of Revenues, 

Expenses, and Changes in Retained 

Earnings 

GPO had operating revenues of $939.1. 

million for fiscal year 2007 and $720.4. 

million for fiscal year 2006. This represents an increase in revenues of $218.7. 

million or 30.4 percent. The Agency had. 

operating expenses, before the effect of. 

the decrease in the GPO’s workers’ compensation liability, of $851.5 million for. 

fiscal year 2007 and $710.6 million for fiscal year 2006. This represents an increase. 

in expenses of $140.9 million or 19.8 percent. GPO realized income from operations, before the effect of the decrease in. 

the GPO workers’ compensation liability,. 

of $87.7 million for fiscal year 2007 and. 

$9.8 million for fiscal year 2006.. 

The significant increases in revenues. 

and expenses during fiscal year 2007. 

are primarily attributable to increased. 

passport production by the Agency and. 

the replacement of traditional passports. 

with the more expensive to manufacture. 

electronic passports (i.e., e-Passports).. 

The new e-Passport contains a computer. 

chip and other security features required. 

by the U.S. Department of State. GPO. 

negotiated a price per e-Passport that. 

included sufficient revenues to fund. 

6.	 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section I: Management’s Discussion and Analysis 

the costs of the new Secure Production. 

Facility that will manufacture e-Passports (see Note 18). As of September 30,. 

2007, approximately $27.8 million of the. 

income from passport operations was. 

earmarked by GPO and the U.S. Department of State for this new facility. 

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 $3.2 million in fiscal year. 

2007 and $6.2 million in fiscal year 2006. 

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 $90.9 million. 

for fiscal year 2007 and $16.0 million for. 

fiscal year 2006. 

About $39.5 million of the consolidated net income of $90.9 million for. 

fiscal 2007 is to pay for two major capital. 

investment projects that are in-process. 

and scheduled to be operational in 2008. 

or 2009. The $39.5 million includes. 

about $27.8 million, or a $1.84 per passport sold, which has been built into the. 

rates negotiated with the State Department. These funds are earmarked for the. 

establishment of a new Secure Production Facility (see Note 18). An additional. 

$11.7 million was capitalized for the. 

development of FDsys which is partially. 

funded by Federal appropriations. 

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 (also see Note 1L). 

n Printing and Binding 

The Agency earns revenues from Federal. 

Government 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. The revenues earned from an. 

in-plant job are generally recognized. 

on a value-added basis, as the work is. 

performed in GPO’s production operations. The revenues from a commercially. 

procured job are generally recognized on. 

the date that the contract requirements. 

are fulfilled. For most procured jobs, this. 

is the date of shipment by the contractor. 

to the Federal Government customer. 

Revenues from printing and binding. 

operations totaled $780.5 million for fiscal year 2007 and $575.9 million for fiscal. 

year 2006. This represents an increase in. 

revenues of $204.6 million or 35.5 percent. Printing and Binding revenues increased primarily because of the unprecedented demand for electronic passports. 

by the U.S. Department of State. 

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. Revenues earned from appropriations totaled $137.0 million for fiscal. 

year 2007 and $119.7 million for fiscal. 

year 2006. The increase in revenues of. 

$17.3 million or 14.5 percent is primarily. 

a result of appropriation expenditures by. 

the Agency for the development of the. 

FDsys and workforce retraining. 

The Legislative Branch Act, 2006 (Public Law 109-55), dated August 2, 2005,. 

made annual appropriations available to. 

the Agency for fiscal year 2006. During. 

fiscal year 2007, GPO and much of the. 

Federal Government operated under four. 

continuing resolutions that covered the. 

entire year (Public Laws 109-289, 109-369,. 

109-383, and 110-5). On September 29,. 

2007, the President of the United States. 

signed a government-wide continuing. 

resolution (Public Law 110-92) that provides fiscal year 2008 funding for GPO. 

through November 16, 2007. 

n Sales of Publications 

GPO earns revenues from the sales of. 

publications to the public and others... 

The Publications and Information Sales. 

Program 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 $16.0 million for fiscal year 2007. 

and $18.6 million for fiscal year 2006... 

This represents a decrease in revenues. 

of $2.6 million or 14 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 provides these services on. 

a cost reimbursement basis, and at rates. 

and prices designed to recover costs... 

Revenues from Agency Distributions. 

totaled $5.6 million for fiscal year 2007. 

and $6.2 million for fiscal year 2006... 

This represents a decrease in revenues. 

of $600,000 or 9.7 percent. Revenues for. 

this program tend to fluctuate because of. 

the varying level of demand for services. 

from customers.. 

Expenses 

GPO incurred total operating expenses. 

of $851.5 million for fiscal year 2007. 

and $710.6 million for fiscal year 2006,. 

before the effect of the annual year-end. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006  
Section I: Management’s Discussion and Analysis 

adjustment for the change in the workers’ compensation liability. The workers’. 

compensation liability decreased by $3.2. 

million in fiscal year 2007 and $6.2 million for the fiscal year 2006. A brief description of the major expense categories. 

for the Agency follows. 

n Printing and Reproduction 

GPO incurred expenses for printing and. 

reproduction of $423.8 million for fiscal. 

year 2007 and $404.4 million for fiscal. 

year 2006. This represents an increase in. 

printing and reproduction expenses of. 

$19.4 million or 4.8 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 increase. 

in printing and reproduction expenses. 

for fiscal year 2007 was primarily attributable to Customer Services purchasing more printing from contractors for. 

customers. 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 1,257 Federal. 

depository libraries located throughout. 

the United States. 

n Personnel Compensation and Benefits 

GPO incurred expenses for personnel. 

compensation and benefits of $202.0 million during fiscal year 2007 and $199.9. 

million during fiscal year 2006. This represents an increase in personnel compensation and benefit expenses of just $2.1. 

million or 1.1 percent. This change was. 

a result of three factors. First, an annual. 

cost of living adjustment for most Printing. 

Grade (PG) employees of 2.64 percent. 

that took effect on January 7, 2007, and. 

the accrual of a similar pay increase for. 

most wage grade employees. Most of. 

these wage grade employees will receive a. 

retroactive pay adjustment of 2.80 percent. 

back to June 10, 2007. This pay increase. 

was accrued in fiscal year 2007 and will. 

be paid in November 2007. Second, overtime costs increased from $7.5 million in. 

fiscal year 2006 to $11.2 million in fiscal. 

year 2007 because of longer work shifts. 

to keep up with unprecedented demand. 

for U.S. Passports. Third, as discussed. 

previously, the VSIP was successfully used. 

to reduce the workforce by 89 employees. 

during fiscal year 2006 which resulted in. 

estimated cost savings of approximately. 

$8.0 million in fiscal year 2007. 

n Supplies and Materials 

GPO incurred expenses for supplies. 

and materials of $152.2 million for fiscal. 

year 2007 and $37.1 million for fiscal. 

year 2006. This represents an increase. 

in supplies and material expenses of. 

$115.1 million or 310 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 a large production facility that. 

uses significant quantities of materials. 

and supplies, including paper and paper. 

products. This expense group also includes equipment, furniture, and vehicle. 

purchases that were expensed when. 

received by GPO as they did not meet. 

the organization’s capitalization threshold. Approximately $116.8 million of. 

the overall increase is attributable to the. 

increase in the production volume of the. 

new e-Passport which also has higher. 

per unit material costs. Approximately,. 

$1.1 million is attributable to a decrease. 

in the cost of materials and supplies. 

used to produce Official Journals of. 

Government. 

n Other Services 

This expense category includes the cost. 

of professional services provided by. 

contractors for audits, investigations,. 

consulting services, system development,. 

tuition, and training. These expenses. 

are recognized when the contractual. 

services have been performed. This expense category also includes the product. 

warranty liability expense for passports. 

manufactured by the Agency. The estimated warranty expense is based on the. 

number of passport books manufactured. 

during that accounting period. GPO. 

incurred expenses for these services of. 

$23.9 million for fiscal year 2007 and. 

$15.6 million for fiscal year 2006. This. 

represents an increase in these expenses. 

of $8.3 million, or 53.2 percent. The. 

increase was primarily attributable to. 

the first time accrual of product warranty liabilities of about $4.8 million for. 

e-Passport sales and an increase of about. 

$2.2 million for professional services. 

n Travel, Transportation, and Postage 

This expense category includes the. 

cost of employee travel and relocation,. 

commercial transportation and delivery. 

services, and postage and commercial. 

mailing services. GPO incurred expenses. 

for travel, transportation and postage. 

of $16.4 million for fiscal year 2007 and. 

$20.2 million for fiscal year 2006. This. 

represents a decrease in travel, transportation and postage expenses of $3.8 million, or 18.8 percent. The decrease was. 

primarily attributable to lower postage. 

costs, especially reimbursable postage. 

n Rents, Communications, and Utilities 

GPO incurred expenses for rents, communications, and utilities of $15.9 million for fiscal year 2007 and $17.8 million for fiscal year 2006. This represents. 

a decrease in the cost of rents, communications, and utilities of $1.9 million,. 

or 10.7 percent. This expense group. 

includes rents for building space outside. 

of Washington, DC, leased equipment. 

and vehicles, and utilities. The decrease. 

was primarily attributable to lower telecommunication costs and a reduction in. 

the cost of leased parking facilities.. 

Consolidated Balance Sheets 

GPO’s total assets increased by $114.7. 

million, or 27.9 percent, from $411.0. 

million as of September 30, 2006 to. 

$525.7 million as of September 30, 2007.. 

This increase in total assets is primarily. 

attributable to a $43.6 million increase. 

in Fund Balance with Treasury and. 

a $41.4 million increase in accounts. 

. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section I: Management’s Discussion and Analysis 

receivable. The increase in Fund Balance. 

with Treasury is the result of cash flows. 

from operating activities of $81.5 million. 

reduced by capital purchases of $22.4. 

million and by financing activities of. 

$15.5 million during fiscal year 2007 (see. 

consolidated statements of cash flows).. 

The increase in accounts receivable of. 

the $41.4 million, or 37.8 percent, is. 

primarily attributable to an increase in. 

Printing and Binding revenues. 

GPO’s liabilities increased by $39.3. 

million, or 16.9 percent during fiscal. 

year 2007. This increase is primarily the. 

result of increases in accounts payable. 

and accrued expenses of $25.3 million. 

and deferred revenues of $12.2 million.. 

These increases were offset by a reduction in workers’ compensation liability of. 

$3.2 million. 

The increase in accounts payable and. 

accrued expenses of $25.3 million was. 

primarily attributable to the increased. 

demand for goods and services acquired. 

by GPO from the commercial sector.. 

The unpaid goods at yearend included. 

about $22.5 million in passport chips,. 

tapes, paper and paper products, and. 

other production materials for the new. 

e-Passports. The unpaid services at yearend included contractor development. 

costs of about $1.5 million for the FDsys. 

Project and the GPO Enterprise Project,. 

two major ongoing IT acquisition projects. Additionally, for the first time, an. 

environmental liability of $570,000 was. 

accrued for asbestos abatement. 

The increase in deferred revenues is. 

a result of an increase of $13.0 million in. 

customer deposit accounts for printing. 

and binding. The number of customer. 

deposit accounts maintained by GPO. 

increased from 718 as of September 30,. 

2006, to 865 as of September 30, 2007. 

The increase in GPO’s net position is. 

primarily a result of the consolidated net. 

income of $90.9 million for fiscal 2007. 

which was discussed above under the. 

Consolidated Statements of Revenues,. 

Expenses, and Changes in Retained. 

Earnings. 

. 

Performance Measures 

GPO gauges its overall efficiency and. 

effectiveness using certain performance. 

measures. Generally, these performance. 

measures are based on established. 

standards, goals, or 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 

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 77 percent for fiscal year 2007 and. 

89 percent for fiscal year 2006. The. 

Agency’s goal of 95 percent was not. 

achieved for fiscal year 2007. The goal. 

will remain the same for fiscal year 2008. 

On-Time Delivery of Procured Printing 

Customer Services, a GPO business. 

unit, contracted with commercial businesses to produce and ship 107,600. 

jobs for GPO customers in fiscal year. 

2007. In comparison, GPO contractors. 

shipped 114,100 jobs in fiscal year 2006.. 

The 5.7 percent decrease in procured. 

printing jobs 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 GPOExpressSM Program enables customers. 

to directly purchase small printing jobs. 

locally from a nationwide contractor.. 

For fiscal year 2007, customers used. 

GPOExpressSM to purchase $3,142,000 in. 

convenience printing jobs locally without going through GPO. In fiscal year. 

2006, customers purchased $849,000. 

in convenience printing jobs through. 

GPOExpressSM. For fiscal year 2007, the. 

goals were to have at least 95 percent of. 

procured printing orders delivered on. 

schedule and a quality acceptance rate. 

of at least 99 percent. Customer Services. 

met both of these goals for fiscal year. 

2007. The two goals will remain the. 

same for fiscal year 2008. 

Financial Performance Measures 

Cash Management 

n Payment Performance. 

In fiscal year 2007, 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 $6.4 million on purchased printing . 

expense of $436.2 million. In comparison, GPO earned $6.5 million in. 

discounts on $417.0 million in printing. 

expenses last year. The average discount. 

rate earned was 1.5 percent for fiscal. 

year 2007 and 1.6 percent for fiscal year. 

2006. The average discount rate earned. 

for fiscal year 2007 exceeded the goal of. 

1.4 percent. The goal will be the same. 

for fiscal year 2008. 

Lost prompt payment discounts. 

increased to $434,000 in fiscal year 2007. 

from $263,000 in fiscal year 2006. The. 

percentages of discounts lost to discounts offered were 6.3 percent and 3.9. 

percent in fiscal years 2007 and 2006,. 

respectively. GPO did not meet its goal. 

of 2.5 percent or less for fiscal year 2007.. 

The lost discounts were generally due to. 

inadequate supporting documentation. 

and other essential information needed. 

to properly examine and certify contractor invoices for payment in a timely. 

manner. The Agency’s goal will be the. 

same for fiscal year 2008. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006  
Section I: Management’s Discussion and Analysis 

n Electronic Payments. 

Electronic Funds Transfer (EFT) is the. 

most secure, efficient, and economical. 

method of making payments to GPO. 

contractors, employees, and other nonFederal entities. While it costs the U.S.. 

Government $.89 to issue each check. 

payment, the cost is only $.09 to issue an. 

EFT payment. In fiscal year 2007 about. 

93 percent of all GPO payments were. 

made by EFT. In comparison, about 74. 

percent of all payments were made by. 

EFT last year. The Agency’s EFT payment. 

goal for fiscal year 2007 was 90 percent. 

of all payments. Thus, GPO successfully. 

exceeded the goal by 3 percent. The EFT. 

payment goal will remain at 90 percent. 

for fiscal year 2008. 

. 

Debt Management 

n Federal Receivables. 

GPO billed customers about $893.1 million for printing and binding services. 

during fiscal year 2007. The U.S. Department of Treasury’s Intra-governmental. 

Payment and Collection (IPAC) System. 

was used to collect about $700.7 million. 

or 78.5 percent of this debt from customers. Additionally, about $39.8 million, or. 

4.5 percent of this debt, was collected. 

from funds held in customer Printing. 

and Binding (P&B) Deposit Accounts. 

maintained by GPO. Furthermore, $16.9. 

million, or 1.9 percent of this debt, was. 

collected via credit card. These electronic-based methods allow the prompt. 

collection of funds, as opposed to the. 

more traditional methods of collection. 

that require the creation and exchange. 

of paper documents and checks through. 

the mail. 

GPO’s billed accounts receivable. 

from Federal Government customers. 

totaled approximately $38.4 million at. 

the end of fiscal year 2007, compared. 

with $7.8 million at the end of fiscal year. 

2006. In comparison, the billed accounts. 

receivables increased by $30.6 million. 

The largest type of billed accounts. 

receivable is IPAC charge backs. IPAC collections initiated by GPO are sometimes. 

charged back by Federal agencies, the. 

customers, for various reasons. In these. 

instances, GPO contacts the customer and. 

inquires about the reason(s) for non-payment of the indebtedness. In most instances, the customer’s financial representative requires additional information and. 

supporting documentation on the billing. 

before the IPAC collection is allowed.. 

IPAC charge backs totaled approximately. 

$22.2 million at the end of fiscal year. 

2007 and $11.4 million at the end of fiscal. 

year 2006. In comparison, IPAC charge. 

backs increased by $10.8 million. 

The U.S. Department of Defense. 

(DoD) is GPO’s second largest customer. 

and largest debtor. Exclusive of IPAC. 

charge backs, DoD owed GPO about. 

$7.1 million at September 30, 2007, of. 

which $6.4 million, or 90.1 percent, was. 

past due in payment (i.e., over 30 days. 

old). DoD owed $634,000 for invoices. 

between 31 to 60 days old, $682,000. 

between 61 to 90 days old, and about. 

$5.1 million over 90 days old. DoD’s. 

indebtedness to GPO of $5.1 million,. 

over 90 days old, represents 28.5 percent. 

of GPO’s total accounts receivables, over. 

90 days old, at year-end. At September. 

30, 2006, DoD owed only $3.8 million. 

to GPO. The increase in indebtedness is. 

primarily attributable to slower payments. 

by some DoD entities. 

At the end of the year, GPO maintained 865 P&B Deposit Accounts valued. 

at $74.3 million. Additionally, GPO held. 

$3.7 million in customer deposit accounts. 

for the Publication and Information Sales. 

Program. Combined, these customer. 

deposit accounts totaled $78.0 million as. 

of September 30, 2007. At September 30,. 

2006, GPO maintained printing and binding deposit accounts totaling $61 million.. 

The $13.3 million increase is primarily. 

attributable to new customers, more accounts, and existing customers increasing. 

their account balances.. 

Customer agencies also have the. 

option of paying for their printing and. 

binding needs by credit card. Credit card. 

transactions in fiscal year 2007 totaled. 

$16.9 million for 24,039 printing jobs.. 

In comparison, credit card transactions. 

totaled $15.2 million for 14,868 printing. 

jobs in fiscal year 2006. 

Possible Future Effects of Existing 

Events and Conditions 

Several existing events and conditions. 

will likely have a major impact on the. 

Agency’s programs and operations in the. 

future. A synopsis of each of these major. 

events and conditions follows. 

n 	 Major Investments in 

 New Technology 

GPO is making significant investments in. 

digital production capabilities, modern information technology systems,. 

electronic passport production 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. The. 

Agency is making significant investments. 

in information technologies to improve. 

performance. First, Phase I of the FDsys. 

Project will replace GPO Access in fiscal. 

year 2008. Afterwards, the FDsys project. 

will continue with efforts to integrate. 

and modernize operations. Second, the. 

GPO Enterprise Project will continue to. 

replace old legacy systems with modern. 

Oracle applications. Phase 2 of the GPO. 

Enterprise Project commenced in 2007. 

and should be complete in 2008. 

n 	 Growth of Security and Intelligent 

Documents. 

The demand for security and intelligent. 

documents, such as electronic passports,. 

smartcards, and Federal identification cards, are expected to continue to. 

grow in the future as a result of Federal. 

Government efforts to strengthen our. 

borders and improve homeland security. GPO produced 20,606,000 passport. 

books in fiscal year 2007 and 13,661,000. 

in fiscal year 2006. This significant production increase of 6,945,000 passport. 

books, or 50.8 percent, is due to an. 

unprecedented increase in demand from. 

the U.S. Department of State. About. 

14,815,000 or 72 percent of 20,606,000. 

passport books produced in fiscal year. 

2007 were the new e-Passports. 

10.	 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section I: Management’s Discussion and Analysis 

To keep up with the increase in demand for e-Passports, GPO is establishing a new Secure Production Facility in. 

a secure remote location. The facility is. 

scheduled to be operational in 2008 (see. 

Note 18). This facility will supplement. 

existing passport production operations. 

and support Agency plans for continuity. 

of business operations. 

n 	 Investment in Secure Production 

 Facility 

GPO is investing about $41.4 million . 

to establish a Secure Production . 

Facility. Plans are underway to renovate. 

an existing Federal Government facility. 

in a remote, secure location. This production facility will be equipped with a. 

new e-Passport production line. 

n 	 Establishment of the GPO Online 

 Paper Store . 

GPO recently teamed up with a worldwide paper distributor to develop the. 

GPO Online Paper Store. All Federal. 

Government organizations can purchase. 

environmentally friendly, xerographic. 

copier paper using this Web-based. 

system. 

n 	 Expansion of the GPOExpressSM

 Program. 

GPO’s partnership with the private. 

sector makes printing and duplicating. 

services readily available 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 Possible Federal Appropriation 

 Reductions 

Printing and duplicationg are generally considered a discretionary cost. 

for Federal customers. The Continuing. 

Resolution (Public Law 110-92, dated. 

September 29, 2007) in regard to certain. 

fiscal year 2008 appropriation bills, and. 

possible future budget reductions and. 

restrictions on growth, may impact the. 

availability of funds for Federal Government printing and duplicating in the. 

future. 

Fiscal Year 2008 Projections 

Congress established the GPO Revolving. 

Fund to finance the business-type operations of the Agency on July 1, 1953. The. 

numerous receipts and disbursements. 

from the Agency’s continuing cycle of. 

business-type operations are recorded. 

in the GPO Revolving Fund which was. 

intended to be financially self-sustaining.. 

The Agency’s overall financial objective. 

has been to earn revenues sufficient. 

enough to recover all costs, including. 

depreciation and overhead, in accordance with Section 309 of Title 44. 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 through. 

2007. An overall net income was realized. 

during each of these years. This recent. 

trend represents a positive turnaround. 

in financial performance for the Agency.. 

GPO had net losses for five straight. 

years before fiscal year 2004. 

In fiscal year 2007, the Agency realized net income of $87.7 million from. 

operations before recognizing a decrease. 

of $3.2 million in DOL’s estimate of. 

workers’ compensation liability for GPO. 

under FECA. Overall, the Agency realized. 

net income of $90.9 million in fiscal year. 

2007 and $16 million in fiscal year 2006.. 

GPO’s financial performance goal for fiscal year 2008 is to continue this positive. 

trend in financial performance. 

The improvements in financial performance are attributable to several major. 

management initiatives over the past five. 

years. First, the Public Printer built a solid. 

management team with vast business and. 

government experience, and a wealth of. 

industry knowledge. Second, the Agency. 

was reorganized into major business units. 

to concentrate on product lines. Third,. 

greater emphasis was placed on serving. 

the needs of customers and improving. 

customer satisfaction. Fourth, managers. 

are now evaluated on their achievement. 

of annual budget goals and financial. 

performance objectives for their business. 

and support units. Fifth, employees are. 

being financially rewarded for reducing. 

costs and contributing to the accomplishment of agency objectives under the Goal. 

Sharing Program. Finally, the workforce is. 

being retrained in the digital technology. 

jobs of the 21st century. 

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 2008 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 2007 and 2006 11 
SECTION II 

Inspector. 

General’s.Report 

12. UNITED.STATES.GOVERNMENT.PRINTING.OFFICE..Financial Year in Review — Fiscal Years 2007 and 2006 
DATE: 

REPLY TO 

ATTN OF: 

SUBJECT: 

TO: 

U.S. GOVERNMENT 

PRINTING OFFICE 

KEEPING AMERICA INFORMED 

November 19,2007 ~ 

;{_' J. ~.A1{J Inspector General '{./ f · I 

Office of the Inspector General 

Report on the Consolidated Financial Statement Audit of the Government 

Printing Office for Fiscal Years Ended September 30, 2007 and 2006 

Report Number 08-02 

Public Printer 

This audit report contains the annual consolidated financial statements of the 

Government Printing Office (GPO) as of the fiscal years (FY) ended 

September 30, 2007 and 2006. We contracted with the independent certified 

public accounting firm ofKPMG LLP (KPMG) to audit the consolidated 

balance sheet; statement of revenue and expenses; and statement of cash flows 

for the years then ended. The audits were conducted in accordance with 

auditing standards generally accepted in the United States; and the standards 

applicable to financial audits contained in the Generally Accepted · 

Government Auditing Standards, issued by the Comptroller General of the 

United States (GAGAS). 

Results of Independent Audit 

KPMG expressed an unqualified opinion on the GPO consolidated financial 

statements as of the FYs ended September 30, 2007, and 2006 by concluding 

that the GPO financial statements were fairly presented, in all material 

respects, in conformity with generally accepted accounting principles 

(GAAP). 

KPMG's consideration of internal control over financial reporting resulted in 

the following significant deficiencies 1

, which KPMG did not consider to be 

material weaknesses2

: 

1 A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely 

affects the GPO's ability to initiate, authorize, record, process, or report financial data reliably in 

accordance with GAAP such that there is more than a remote likelihood that a misstatement of the 

GPO's consolidated financial statements that is more than inconsequential will not be prevented or 

detected by the GPO's internal control over financial reporting. 

2 A material weakness is a significant deficiency, or combination of significant deficiencies, that results 

in more than a remote likelihood that a material misstatement of the financial statements will not be 

prevented or detected by the GPO's internal control. 

732 North Capitol Street NW Washington, DC 20401-0050 lnspectorGeneral@gpo.gov 
14 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review Fiscal Years 2007 and 2006 — 

Public Printer 

November 19,2007 

Page 2 of3 

• Certain reconciliation controls should be improved; 

• Misapplication of generally accepted accounting principles; and 

• Information Technology general controls should be improved. 

In general, (1) GPO did not always perform key reconciliations timely and 

when performed, differences noted were not consistently investigated and 

resolved in a timely manner; (2) in one instance related to the review and 

reporting of fixed assets and another instance related to recognition of 

appropriated revenue, GPO misapplied GAAP to these non-routine 

transactions; and, (3) KPMG identified deficiencies in the design and/or 

operations of GPO's information technology (IT) general controls. 

The reconciliation and IT general control deficiencies were also identified 

during the FY 2006 audit. 

KPMG disclosed no instances of noncompliance with certain provisions of 

laws, regulations, and contracts or other matters that are required to be 

reported under GAGAS. 

Evaluation and Monitoring of Audit Performance 

We reviewed the KPMG audit of the GPO consolidated financial statements 

by: 

• 

• 

• 

• 

• 

• 

• 

Evaluating the independence, objectivity, and qualifications of the 

auditors and specialists; 

Reviewing the approach of and planning for the audit; 

Attending key meetings with auditors and GPO officials; 

Monitoring the audit progress; 

Examining audit documentation; 

Reviewing the auditors' reports; and 

Reviewing the financial statements and associated footnotes . 

KPMG is responsible for the attached reports dated November 15, 2007, and 

the conclusions expressed in the reports. Our review, as differentiated from 

an audit in accordance with GAGAS, was riot intended to enable us to 

express, and accordingly we do not express, an opinion on GPO's financial 

statements, the effectiveness of internal controls, or compliance with laws and 

regulations. However, our monitoring review, as limited to the procedures 

listed above, disclosed no instances in which KPMG did not comply, in all 

material respects, with GAGAS. 
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 15

Public Printer 

November 19, 2007 

Page 3 of3 

If you have any questions or comments about this report, please do not 

hesitate to contact me, or Mr. Kevin Carson, Assistant Inspector General for 

Audits and Inspections, at (202) 512-2009 or through email at 

kcarson(a),gpo. gov. 

J. Anthony Ogden 

INSPECTOR GENERAL 

Attachment 

cc: Chief of Staff 

General Counsel 
SECTION III 

Independent 

Auditors’.Report 

16. UNITED.STATES.GOVERNMENT.PRINTING.OFFICE..Financial Year in Review — Fiscal Years 2007 and 2006 
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 17

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, 2007 and 2006, and the related consolidated statements of revenues, 

expenses and changes in retained earnings and cash flows (hereinafter referred to as "consolidated financial 

statements") 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 fiscal year 2007 audit, 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, 2007 and 2006, are presented fairly, in all 

material respects, in conformity with U.S. generally accepted accounting principles. 

Our consideration of internal control over financial reporting resulted in the following conditions being 

identified as significant deficiencies: 

A. Certain reconciliation controls should be improved 

B. Misapplication of U.S. generally accepted accounting principles 

C. Information Technology general controls should be improved 

We do not consider the significant deficiencies, above, 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 herein 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, 2007 and 2006, and the related consolidated statements of revenues, expenses 

and changes in retained earnings and cash flows for the years then ended. 
18 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 

In our opm1on, 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, 2007 

and 2006, and the results of its operations and its cash flows for the years then ended, in conformity with 

U.S. generally accepted accounting principles. 

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 financial 

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 the internal control over financial reporting was for the limited purpose described in 

the Responsibilities section of this report and would not necessarily identify all deficiencies in the internal 

control over financial reporting that might be significant deficiencies or material weaknesses. 

A control deficiency exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent or detect misstatements 

on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, 

that adversely affects GPO's ability to initiate, authorize, record, process, or report financial data reliably in 

accordance with U.S. generally accepted accounting principles such that there is more than a remote 

likelihood that a misstatement of GPO's consolidated financial statements that is more than 

inconsequential will not be prevented or detected by GPO's internal control over financial reporting. A 

material weakness is a significant deficiency, or combination of significant deficiencies, that results in 

more than a remote likelihood that a material misstatement of the financial statements will not be prevented 

or detected by GPO's internal control. 

In our fiscal year 2007 audit, we consider the deficiencies, described in Exhibit I, to be significant 

deficiencies in internal control over financial reporting. However, we believe that none of the significant 

deficiencies described in Exhibit I are material weaknesses. Exhibit II presents the status of prior year 

reportable conditions. 

COMPLIANCE AND OTHER MATTERS 

The results of 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 herein 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. 
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 19

In fulfilling this responsibility, management is required to make estimates and judgments to assess the 

expected benefits and related costs of internal control policies. 

Auditors' Responsibilities. Our responsibility is to express an opinion on the fiscal year 2007 and 2006 

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 

financial 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 m 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 fiscal year 2007 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 as a basis for 

designing 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 express an opinion on 

the effectiveness of GPO's internal control over financial reporting. Accordingly, we do not express an 

opinion on the effectiveness of GPO's internal control over financial reporting. 

As part of obtaining reasonable assurance about whether GPO's fiscal year 2007 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 opmwn. 

GPO's response to the findings identified in our audit are presented in Exhibit I. We did not audit GPO's 

response and, accordingly, we express no opinion on it. 

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

November 15, 2007. 
20 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 

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 of Inspector General, the U.S. 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. 

November 15, 2007 
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 21

Exhibit I 

Fiscal Year 2007 Significant Deficiencies 

A. Certain reconciliation controls should be improved 

During fiscal year 2007, 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 United States Government Printing Office (GPO) did not investigate and resolve 

differences of approximately $6.8 million identified in the Fund Balance with Treasury 

'Check Issued Discrepancy Reports (FMS 5206)' for the month of June 2007. As of 

September 30, 2007 this difference is approximately $4.6 million. A significant amount of 

the differences noted were investigated and resolved in October 2007, and it was determined 

that no adjustment was required to the financial statements as of September 30, 2007. 

2. GPO did not investigate and resolve a difference of approximately $542,000 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 

2007. As of September 30, 2007, this difference is approximately $320. 

3. GPO performs a reconciliation to identifY differences between the Depositor Account balance 

per the general ledger to the balance per the subsidiary ledger. However, we noted that as of 

June 30, 2007, there was a difference of $350,905 between the subsidiary ledger and the 

general ledger that was not timely investigated and resolved. As of September 30, 2007, this 

difference is approximately $12,000. 

4. GPO did not perform a reconciliation between the payroll processed by its payroll service 

provider, the amount disbursed from the Treasury, and the general ledger until August 31, 

2007. The September 30, 2007 payroll reconciliation was performed timely correcting this 

ISSUe. 

5. GPO does not perform periodic reconciliations between the Sales of Publication subsidiary 

ledger and the general ledger. During GPO's year-end reconciliation between the Sales of 

Publications Inventory and the general ledger, an adjustment of approximately $4.03 million 

was recorded to the general ledger. 

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 (Standards) 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. 
22 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 

Exhibit I (continued) 

Fiscal Year 2007 Significant Deficiencies 

Recommendation: 

We recommend that GPO enforces its existing policies and ensure that they are in compliance 

with TFM requirement and GAO Standards, that require these monthly reconciliations to be 

performed and the timely investigation and resolution of differences identified. 

Management Response: 

Management concurs with these findings and recommendations. 

B. Misapplication of U.S. generally accepted accounting principles 

During our fiscal year 2007 audit work, we noted two instances where GPO misapplied U.S. 

generally accepted accounting principles (GAAP) and the internal controls at GPO did not 

identify the difference timely. Both of these instances related to non-routine transactions in each 

of these areas. 

1. Review and Reporting of General Property, Plant and Equipment 

During fiscal year 2007, GPO reflected deposits on new equipment in the amount of 

approximately $2.6 million as General Property, Plant, and Equipment (PP&E) additions in its 

PP&E subsidiary ledger as well as its general ledger. Specifically, GPO signed a contract to 

purchase equipment. The contract requires GPO to make installment payments until the 

acceptance of the equipment in April 2008. GPO made three payments totaling approximately 

$2.6 million in fiscal year 2007 and recorded the expenditures as PP&E additions when they did 

not have title to the equipment. GPO properly reclassified the expenditures to a 

prepayment/advance account as of September 30, 2007. 

2. Revenue Recognition of Appropriated Revenue 

During fiscal year 2007, GPO recognized Revolving Fund appropnatlon revenues of 

approximately $1.5 million related to liabilities incurred by GPO in fiscal year 2006. While GPO 

recognized the expenses related to the Federal Digital Content System (FDsys) in the correct 

period, GPO did not recognize the revenue until the invoices were paid in fiscal year 2007. Under 

GAAP, appropriation revenues are to be recognized at the time that a liability has been incurred. 

We noted per the GAO's Standards that "Transactions should be promptly recorded to maintain 

their relevance and value to management in controlling operations and making decisions. This 

applies to the entire process or life cycle of a transaction or event from the initiation and 

authorization through its final classification in summary records. In addition, control activities 

help to ensure that all transactions are completely and accurately recorded." 

Statement of Financial Accounting Concepts (SFAC) No. 6, Elements of Financial Statements, 

states that: 

1. Assets are recorded when there is future economic benefit and the asset is controlled by the 

entity. 
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 23

Exhibit I (continued) 

Fiscal Year 2007 Significant Deficiencies 

Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other 

Financing Sources states that: 

1. Revenue classified as exchange revenue should be matched with costs. 

2. An exchange transaction occurs when one party sacrifices value and receives a valuable good 

or service in return. 

3. Appropriation revenues are to be recognized at the time that a liability has been incurred. 

Recommendations: 

We recommend that GPO strengthen its controls related to each of these non-routine transactions 

as follows: 

1. Review and Reporting of PP&E 

Accountants should validate the receipt of a PP&E (through physical inspection, confirmation 

from the program managers, and comparison of the invoice to the receiving documents and 

the purchase order) or validate GPO's title to an asset, whichever is applicable, before 

recording the expenditure as PP&E in its subsidiary ledger in accordance with GPO's policy. 

In addition, program managers should be provided additional guidance to ensure the proper 

coding of such equipment acquisitions in the future. 

2. Revenue Recognition of Appropriated Revenue 

Improve controls to ensure that all Revolving Fund expenditures incurred during the fiscal 

year that are to be funded with Federal appropriations are identified so that the related 

appropriated revenues can be recognized at the time that the liability is incurred in accordance 

with GAAP. 

Management Response: 

Management concurs with these findings and recommendations. 

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

During fiscal year 2007, 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. A-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 three control areas 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 significant deficiency. The details of this condition, several of which have been 

reported to management in prior years' audit reports, are as follows: 
24 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 

Exhibit I (continued) 

Fiscal Year 2007 Significant Deficiencies 

1. Entity-Wide Security Program 

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

fiscal year 2007, GPO continued implementing an enterprise-wide security program to 

formalize GPO's established information security objectives and high level policy. However, 

as noted in the prior year, GPO has not completed the certification and accreditation of its key 

financial systems or the general support system (GSS). This process is a critical element of an 

organization's overall security program. Specifically, it is used to identify all risks posed to a 

system; to plan or implement the controls necessary to mitigate those risks; and to certify the 

operation of the controls. 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 

Overall, GPO's access controls require strengthening in order to provide a more secure 

financial processing environment. During FY 2007, GPO has implemented a process to 

provide monthly notifications of employee separations, along with monthly separation 

summary emails. However, the following access controls at GPO need improvement: 

a. As noted in the prior year, improvements are needed to ensure that documented policies 

and procedures are followed by notifying all system owners of terminated employees. 

Specifically, GPO is not ensuring the timely removal of separated employee access to all 

GPO IT resources, including the Local Area Network (LAN), GPO Mainframe, and 

Oracle On-Demand application. 

b. GPO is not consistently following documented policies and procedures for granting 

access to the LAN, the Mainframe, Oracle On-Demand, or the Data Center. 

c. As noted in the prior year, GPO is not granting access to the Data Center on a businessneed-only basis and is not reviewing access for appropriateness or removing access of 

separated employees in a timely manner. 

d. Media sanitation policies and procedures need to be strengthened to include servers and 

magnetic media. 

Access controls should provide reasonable assurance that computer resources (data files, 

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 Software 

The controls over the modification of system software need improvement. During FY 2007, 

GPO management finalized procedures for server patch management. However, GPO has not 

finalized procedures for desktop configuration management, as noted in the prior year. In 

addition, GPO has implemented the ConfigurSoft Tool to maintain a standard configuration 

across the server environment; however, this tool is not in use over the workstation/desktop 

computer environment. 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 
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 25

Exhibit I (continued) 

Fiscal Year 2007 Significant Deficiencies 

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. Application Software Development and Change Control 

Establishing controls over the modification of application software programs helps to ensure 

that only authorized programs and authorized modifications are implemented. This is 

accomplished by instituting policies, procedures, and techniques that help make sure all 

programs and program modifications are properly authorized, tested, and approved and that 

access to and distribution of programs is carefully controlled. Without proper controls, there 

is a risk that security features could be inadvertently or deliberately omitted or "turned off'' or 

that processing irregularities or malicious code could be introduced. While change control 

policies and procedures do exist for GPO mainframe environment, they do not include GPO 

server environment or GPO-specific change controls policies and procedures related to the 

Oracle On-Demand application. 

5. 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. During 

FY 2007, GPO continued with efforts to minimize the risk of unplanned interruptions and 

recover critical operations should an interruption occur. However, as noted in the prior year, 

GPO has not established a contingency plan for the financial reporting systems or the GSS. In 

addition, GPO has developed high-level backup and recovery policies for the mainframe 

environment; however the document should be strengthened to include the backup and 

recovery of the server environment. 

Recommendations: 

We recommend that GPO continue to strengthen its IT general controls m each of the five 

domains as follows: 

1. Entity-Wide Security Program 

a. We recommend that GPO complete the certification and accreditation of all maJor 

applications, including key financial systems, and the GSS. 

2. Access Controls 

a. We recommend that GPO implement review procedures to ensure that user access to all 

GPO IT resources be removed timely for all separated employees and contractors. 
26 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 

Exhibit I (continued) 

Fiscal Year 2007 Significant Deficiencies 

b. We recommend that GPO management update GPO Data Center proximity card system 

so that badge access is removed for terminated employees and contractors, as well as 

other current, unauthorized employees and contractors, and perform quarterly reviews of 

GPO Data Center access, as noted in the memorandum entitled Process for Access 

Control of the 8'h Floor Data Center. 

c. We recommend that GPO management work to ensure that policies and procedures for 

requesting, monitoring, and removing access to all GPO IT resources are consistently 

followed and all requests for access are documented and approved. 

d. We recommend that GPO update policies and procedures for the sanitization of electronic 

media to include both servers and magnetic/removable media. 

3. System Software 

a. We recommend that GPO management continue to improve the patch management 

process by finalizing desktop-specific patching procedures and continuing to work 

towards full implementation of the ConfigureSoft configuration management software. 

4. Application Software Development and Change Control 

a. We recommend that GPO develop change control procedures for GPO server 

environment and GPO-specific responsibilities regarding changes to the Oracle 

On-Demand application. 

5. Service Continuity 

a. We recommend that GPO management continue to develop a business resumption and 

contingency plan for all major applications, including key financial applications, and the 

GSS. 

b. We recommend that GPO update backup and recovery procedures to include the server 

environment. 

Management Response: 

Management concurs with these findings and recommendations. 
UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 27

Exhibit II 

Status of Prior Year Reportable Conditions 

Prior Year Condition Prior Year Status as of 

Recommendation September 30, 2007 

Controls surrounding the 1. Customers are only billed once Closed 

billing process should be for each order; 

strengthened 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. 

Certain reconciliation controls Enforce its existing policies that Significant Deficiency: This 

should be improved require monthly reconciliations to finding has been repeated in the 

be performed and the timely current year, see Exhibit I, 

investigation and resolution of letter A. 

differences identified in compliance 

with TFM requirements and GAO 

standards. 

Controls over recording and Implement adequate controls that Closed 

reporting environmental include the review and assessment 

liabilities should be improved of all potential environmental 

liabilities in GPO's facilities for 

financial reporting purposes. This 

review and assessment should 

involve 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. 

Information Technology (IT) general controls should be improved 

Entity-Wide Security Program a. Complete the certification and Significant Deficiency: This 

accreditation of key financial finding has been partially 

systems. repeated in the current year, see 

b. Deploy an information Exhibit I, letter C. 
28 UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 

Exhibit II 

Status of Prior Year Reportable Conditions 

Prior Year Condition Prior Year Status as of 

Recommendation September 30, 2007 

security awareness program to 

all GPO personnel and provide 

confirmation that all personnel 

receive this training. 

Access Controls a. Improve password settings. Significant Deficiency: This 

b. Enhance employee checkout finding has been repeated in the 

procedures. current year, see Exhibit I, 

letter C. 

System Software 

a. Develop and implement Significant Deficiency: This 

procedures to manage changes finding has been partially 

to system software components, repeated in the current year, see 

which include notifying the user 

Exhibit I, letter C. 

community of network 

availability outages. 

b. Document all system software 

changes in a tracking system. 

Documentation should evidence 

testing and approvals required 

for system software changes. 

Service Continuity a. Complete testing of the GPO Significant Deficiency: This 

contingency plan and update the finding has been repeated in the 

contingency plan current year, see Exhibit I, 

documentation as necessary 

letter C. 

based on analysis of 

contingency plan tests. 

SECTION IV 

Consolidated. 

Financial. 

Statements 

30. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
UNITED STATES GOVERNMENT PRINTING OFFICE 

Consolidated Balance Sheets 

As of September 30, 2007 and 2006 

(Dollars in thousands) 

ASSETS. . 

	 Current assets	 	 

	 	 Fund balance with Treasury (Note 2) 	 

	 	 Accounts receivable, net (Note 3)	 

	 	 Inventory, net (Note 4)	 

	 	 Prepaid expenses (Note 5)	 

2007 

$	 273,446	 

	 150,977	 

	 29,733	 

	 3,958 	 

2006 

$	 229,805	 

	 109,547	 

	 13,093	 

	 1,688	 

	 

	 

	 	 Total current assets 

General property, plant and equipment, net (Note 6)	 	 

458,114 

67,600	 	 

354,133 

56,894	 

	 	 	 Total assets $ 525,714 $ 411,027 

LIABILITIES AND NET POSITION	 

	 Current liabilities	 

	 	 Accounts payable and accrued expenses (Note 7)	 

	 	 Deferred revenues (Note 8)	 

	 	 Accrued annual leave 	 

	 

	 

$	 109,324	 

	 81,715	 

	 9,813 	 

$	 84,008 

	 69,559 

	 9,586	 

Total current liabilities 200,852 163,153 

	 

	 

	 

Other liabilities	 	 

	 Workers’ compensation liability (Note 9)	 

	 Product warranty liabilities (Note 10C)	 

	 

	 

66,723	 

4,833	 

	 69,951	 

—	 

	 Total liabilities 272,408 233,104 

	 

	 

	 

	 

	 

	 

Commitments and contingencies (Notes 10 and 11)	 

Net position (Note 12)	 

	 Cumulative results of operations:	 

	 	 Retained earnings 	 

	 	 Invested capital	 

	 Unexpended appropriations	 

	 

	 

	 

	 

	 

	 

108,164	 

92,879	 

52,263	 

	 

	 

	 

17,281	 

92,879	 

67,763		 

	 	 Total net position 253,306 177,923 

Total liabilities and total net position $ 525,714 $ 411,027 

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

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 31 
UNITED STATES GOVERNMENT PRINTING OFFICE
 

Consolidated Statements of Revenues, Expenses, and Changes in Retained Earnings 

For the Fiscal Years Ended September 30, 2007 and 2006 

(Dollars in thousands) 

2007 2006 

OPERATING REVENUES	 	 	 	 

	 Printing and binding	 $	 780,482	 $	 575,885	 

	 Appropriations		 	 137,041	 	 119,738 

	 Sales of publications	 	 16,032	 	 18,560 

	 Agency distributions	 	 5,553	 	 6,196	 

	 Total operating revenues 939,108 720,379 

OPERATING EXPENSES	 	 

	 Printing and reproduction	 	 423,845	 	 404,412 

	 Personnel compensation and benefits	 	 201,950	 	 199,910 

	 Supplies and materials	 	 152,182 	 	 37,112 

	 Other services	 	 23,901	 	 15,571	 

	 Travel, transportation, and postage	 	 16,428	 	 20,181 

	 Rents, communications, and utilities	 	 15,873 	 	 17,755 

	 Publications sold	 	 8,424	 	 8,042 

	 Depreciation and amortization	 	 8,850 	 	 7,606	 

	 Subtotal 851,453 710,589 

Income before other operating expenses 87,655 9,790 

OTHER OPERATING EXPENSES 	 

	 Decrease in workers’ compensation liability (Note 9)	 	 3,228	 	 6,171 

. Net Income	 $ 90,883 $ 15,961 

	 	 Retained Earnings, beginning of year 	 	 17,281	 	 1,320 

Retained Earnings, end of year $ 108,164 $ 17,281 

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

32. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
UNITED STATES GOVERNMENT PRINTING OFFICE
 

Consolidated Statements of Cash Flows 

For the Fiscal Years Ended September 30, 2007 and 2006 

(Dollars in thousands) 

2007 2006 

CASH FLOWS FROM OPERATING ACTIVITIES	 	 

	 Net income $ 90,883 $ 15,961 

	 Adjustments to reconcile net income to net cash 	 	 

	 	 provided by operating activities:	 	 

	 	 	 Depreciation and amortization	 	 8,850 	 	 7,606	 

	 	 	 Gain on disposal of general property, plant and equipment	 	 (3)	 	 (41) 

	 	 Changes in assets and liabilities:	 	 

	 	 	 (Increase) decrease in assets-	 	 

	 	 	 	 Accounts receivable	 	 (41,431)	 	 (5,446) 

	 	 	 	 Inventory	 	 (16,639) 	 	 (4,039) 

	 	 	 	 Prepaid expenses	 	 585	 	 1,625 

	 	 	 Increase (decrease) in liabilities-	 	 

	 	 	 	 Accounts payable and accrued expenses	 	 25,316	 	 6,144 

	 	 	 	 Deferred revenues	 	 12,155	 	 14,817 

	 	 	 	 Accrued annual leave	 	 227 	 	 (453) 

	 	 	 	 Workers’ compensation liability	 	 (3,228) 	 	 (6,171) 

	 	 	 	 Product warranty liability	 	 4,833 	 — 

Total adjustments (9,335) 14,042 

Net cash provided by operating activities 81,548 30,003 

CASH FLOWS FROM INVESTING ACTIVITIES	 	 

	 Capital purchases	 	 (22,410)	 	 (8,328) 

	 Proceeds from sale of general property, plant and equipment	 	 3	 	 41 

Net cash used in investing activities (22,407) (8,287) 

CASH FLOWS FROM FINANCING ACTIVITIES. 	 

	 (Decrease) Increase in unexpended appropriations	 	 (15,500)	 	 1,378 

Net cash (used in) provided by financing activities (15,500) 1,378 

Net increase in fund balance with Treasury 43,641 23,094 

Fund balance with Treasury, beginning of year	 	 229,805 	 	 206,711	 

Fund balance with Treasury, end of year $ 273,446 $ 229,805 

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

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 33 
Section IV: Consolidated Financial Statements 

SECTION IV 

Notes to Consolidated Financial Statements 

September 30, 2007 and 2006 

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. 

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 with 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. 

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 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 information dissemination programs of the Agency that are funded by annual appropriations. 

34. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

The GPO Revolving Fund is a self-sustaining financial entity used primarily to finance and account for GPO’s Printing and. 

Binding Operations and 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 a system of rates used to bill customers.. 

These rates include direct costs, depreciation, overhead, and related expenses permitted under 44 U.S.C. § 309. 

The Publication and Information Sales Program 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. This price discount is also available to GPO employees. 

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 Government information dissemination services provided to. 

the public without charge to the recipients. 

The Congressional Printing and Binding (CP&B) 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 Salaries and Expenses (S&E) Appropriation is used by the Library Services and Content Management, a GPO business. 

unit, to fund 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 this annual appropriation is used to finance the FDLP. 

Expenditures from these appropriations are used to reimburse the GPO Revolving Fund for printing and binding, and other. 

services and supplies furnished by GPO in accordance with Title 44, Public Printing and Documents, of the United States Code. 

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 debt collection experience. 

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. 

determining the percentage of potential excess inventory stock items on hand. Inventories of paper, materials and supplies. 

include the cost of production material (e.g., blank paper, computer chips, 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. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 3 
Section IV: Consolidated Financial Statements 

F. Property, Plant and Equipment 

Property, plant and equipment purchases are generally valued at their acquisition cost. The Agency 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. The cost of major. 

alterations and renovations to the GPO facility are capitalized and depreciated, while the cost of maintenance and repairs are. 

expensed when incurred. The depreciation of property, plant and equipment is calculated on a straight-line basis over the estimated useful life of the asset. The depreciation of an asset commences the month after the asset is first placed in service. 

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. 

Estimated Useful Life Of Capitalized Assets 

Asset Category Standard Estimated Useful Life (Years) 

Land	 N/A 

Building Improvements	 20 

Building Appurtenances	 20 

Other Structures and Facilities	 20 

Furniture and Fixtures	 20 

Leasehold Improvements	 10 

Plant Machinery and Equipment	 10 

Office Machinery and Equipment	 5 

Motor Vehicles	 5 

Computer and Software	 3 

Land has an indefinite life and is not subject to depreciation. Leasehold improvements are generally depreciated over 10 years. 

or the remaining duration of the lease for real property, whichever is shorter. 

Printing equipment transferred to GPO from other Federal agencies under the provisions of 44 U.S.C. § 312 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 property transfer. 

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. The liability is reduced when leave is used. The annual leave liability is calculated using the current hourly salary or wage of employees multiplied by their total hours of unused annual leave. Employees. 

will receive a lump-sum payment for any unused annual leave when they separate from Federal service or enter active military. 

service. 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. 

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. 

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 benefits paid. 

on GPO’s behalf. 

36. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

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 Retirement 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 11. 

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. 

K. Product Warranty Liabilities 

Product warranty liabilities are recognized for U.S. Passports manufactured by GPO for the U.S. Department of State. GPO sells. 

blank electronic passports (e-Passports) to the U.S. Department of State which completes this travel document that is sold to. 

millions of U.S. Citizens annually. The product replacement warranty program started in fiscal year 2007 to coincide with the. 

Federal Government’s transition from the legacy passport to the new e-Passport that contains a computer chip (see Note 10C).. 

L. 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 value-added 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 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. 

M. Expense Recognition 

Printing and Reproduction – This expense includes the cost of printing, duplicating, and reproduction orders that are procured. 

by GPO 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).. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 3 
Section IV: Consolidated Financial Statements 

Personnel benefits also include the cost of transit benefits provided by GPO to employees, as well as the cost of the incentive. 

and performance awards to employees (e.g., GPO Goal Sharing Program). Personnel compensation and benefits are recorded as. 

expenses when earned by employees. 

Supplies and Materials – Computer chips required for U.S. Passport production are the most significant cost component within. 

the category of supplies and materials. Passport supplies and materials are recorded as an expense when used in production. 

operations. The second most significant component is paper and paper products that are commercially procured to satisfy. 

GPO’s in-plant printing requirements and customer orders for blank paper. The expense is recorded when paper is drawn from. 

inventory to fulfill an order or delivered to the customer in the case of 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. 

Other Services – This expense category includes the cost of professional services by contractors. The expenses are recognized. 

when the contractual services have been performed. 

Travel, Transportation, and Postage – 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. Postage and commercial mail services are recorded as expenses when the delivery services are provided by. 

the U.S. Postal Service and commercial carriers. 

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 other motor vehicles. Communications costs include data, voice, video, and wireless services.. 

Utilities include electricity, gas, steam, and water. Expenses are recorded as services are provided and energy resources are used. 

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. Additionally, this. 

expense includes any change in the estimated cost of the publications held in inventory for sale to the public that are potentially obsolete, damaged, or surplus. 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. 

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. The acquisition cost of each capitalized asset. 

is depreciated, or amortized, over the asset’s estimated useful life which is generally measured in years. The monthly depreciation, or amortization, of a capitalized asset commences at the beginning of the first full-month after the date that the capitalized. 

asset was placed in service.. 

N. 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. 

O. 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 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 estimates that most significantly impact the assets, liabilities, revenues, and expenses reflected in the accompanying consolidated financial statements. 

are: the allowance for inventory obsolescence for materials, supplies, and publications held for sale; the allowance for doubtful. 

3. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

accounts related to accounts receivable; the estimated useful lives of fixed assets; the actuarial estimated liability for. 

future workers’ compensation benefits; the product warranty liability for the replacement of defective passport books;. 

and estimated contingent liabilities. 

P. 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. 

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, 2007 and 2006 follows. 

	 (Dollars in thousands) 

2007 2006 

Fund Balances:. . 

	 Revolving Fund:	 	 

	 	 Unrestricted 	 

	 	 Restricted: 	 

	 	 	 Deposit accounts	 

	 	 Retirement Separation Incentive Program	 

	 	 	 Other	 	 	 

$	 117,150	 $	 73,195 

	 

	 77,961	 	 65,025 

4,562 	 4,562	 

	 18,793	 	 17,358 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 	 Total revolving fund 

General Funds:	 

	 Congressional printing and binding 	 

	 Salaries and expenses 	 

	 Supplemental and other	 

218,466 

	 

	 17,620	 

	 17,645	 

	 19,715 	 

160,140 

	 30,413 

	 13,019 

	 26,233	 

	 	 	 	 Total general funds 54,980 69,665 

Total $ 273,446 $ 229,805 

Status of Fund Balance with Treasury:	 

	 	 Unobligated balance:	 

	 	 	 Available	 	 

	 	 	 Unavailable	 

	 

	 

$	 58,612	 

	 19,715	 

$	 26,938	 

	 26,233 

	 	 	 	 Total 78,327 53,171 

	 Obligated balance not yet disbursed	 	 195,119	 	 176,634 

	 	 	 	 Total $ 273,446 $ 229,805 

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 12B. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 3 
Section IV: Consolidated Financial Statements 

3. Accounts Receivable, Net 

Accounts receivable, net of an allowance for doubtful accounts, as of September 30, 2007 and 2006, consisted of the following. 

	 (Dollars in thousands) 

2006 

Federal Agencies:		
 

	 Unbilled accounts receivable	
 $	 104,852	 

	 Billed completed work	 	 7,828 

	 Subtotal 112,680 

Other receivables:		
 

	 The public		 	 	
 	 1,838 

	 GPO employees	 	 	 890 

	 

Subtotal 2,728 

	 Total accounts receivable 115,408 

Less: Allowance for doubtful accounts	 	 (5,861) 

Total accounts receivable, net $ 109,547 

2007 

$	 115,042	 

	 38,410	 

153,452 

	 1,685	 

	 934	 

2,619 

156,071 

	 (5,094)	 

$ 150,977 

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. 

Unbilled accounts receivable result from the delivery of the goods and 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, 2007 and 2006. 

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. Inventory, Net 

Inventory, net of an allowance for surplus and obsolete stock, as of September 30, 2007 and 2006, consisted of the following. 

	 (Dollars in thousands) 

2006 

Publications for sale	 	 $	 9,099 

Paper	 	 	 	 	 	 3,135 

Materials and supplies	 7,868 

	 Total inventory 20,102 

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

	 Inventory, net $ 13,093 

2007 

$	 5,406	 

3,455 	 

25,435 	 

34,296 

(4,563) 	 

$ 29,733 

The materials and supplies inventory included $18.4 million in computer chips at September 30, 2007. The computer chips are. 

used in the production of electronic passports. 

40. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

. Prepaid Expenses 

Prepaid expenses totaled $4.0 million as of September 30, 2007, and $1.7 million as of September 30, 2006. This. 

represents an increase of $2.3 million. During fiscal year 2007, GPO made advances of $2,854,000 to two contractors. 

manufacturing speciality equipment with a long construction period. This plant machinery and equipment will be. 

delivered to the new Secure Production Facility in 2008 (see Note 18). These contractor advances were classified as. 

prepaid expenses at September 30, 2007. Additionally, fiscal year 2005 advances to GovWorks for IT acquisition projects decreased by $317,000 during fiscal year 2007 as a result of enhancements made to GPO Access. GPO advances to. 

GovWorks totalled $953,000 as of September 30, 2007. 

6. General Property, Plant and Equipment, Net 

Net property, plant and equipment as of September 30, 2007 and 2006 consisted of the following. 

	 (Dollars in thousands) 

2006 

Land	 	 	 	 	 	 $	 9,971 

Buildings and improvements	 	 76,083	 

Plant machinery and equipment	 	 73,579 	 

Computers and computer software	 	 32,126 	 

Furniture and fixtures	 	 	 6,108 

Motor vehicles	 	 	 	 	 565 

Leasehold improvements	 	 934	 

Construction and software in process	 	 753 

Total 200,119 

Less: Accumulated depreciation and amortization	 (143,225) 

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

2007 

$	 9,971 	 

	 76,910 	 

	 74,128 	 

	 46,464 	 

	 6,231 	 

	 565 	 

	 729 	 

—		 

214,998 

(147,398)	 

$ 67,600 

Depreciation expenses were $8,850,000 for fiscal year 2007 and $7,606,000 for fiscal year 2006. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 41 
Section IV: Consolidated Financial Statements 

. Accounts Payable and Accrued Expenses 

Accounts payable and accrued expenses as of September 30, 2007 and 2006 were composed of the following.. 

	 (Dollars in thousands) 

Accounts payable:	 

	 Commercial printing 	 

	 U.S. Government agencies	 

	 Other	 	 	 	 	 

	 	 	 Total accounts payable 

Accrued salaries and payroll taxes	 

	 Total accounts payable and accrued expenses 

2007 2006 

$ 	 42,761 	 $ 	 43,252 

	 13,488 	 	 14,066	 

	 39,573 	 	 14,443 	 

95,822 71,761 

	 13,502 	 	 12,247	 

$ 109,324 $ 84,008 

The increase in accounts payable of $25.3 million was attributable to the increased demand for goods and services acquired by. 

GPO from the commercial sector. The increase of approximately $25.1 million in other accounts payable includes about $22.5. 

million in materials and supplies for the new e-Passports. The unpaid services at year end included contractor development. 

costs of about $1.5 million for the FDsys Project and the GPO Enterprise Project. Additionally, for the first time, an environmental liability of $570,000 was accrued for asbestos abatement. 

. Deferred Revenues 

As of September 30, 2007 and 2006, deferred revenues from customers consisted of the following. 

	 (Dollars in thousands) 

2006 

Deposit accounts	 	 	 $	 65,025 	 

Subscriptions	 	 	 	 	 3,666 

Unfilled orders 	 	 	 	 313	 

Advance billings	 	 	 	 555 

	 Total $ 69,559 

2007 

$	 77,961 	 

	 3,072 	 

	 396 	 

	 286 	 

$ 81,715 

GPO held $78.0 million and $65.0 million in customer deposit accounts as of September 30, 2007 and 2006, respectively. Federal Government customers had advanced funds of $74.3 million and $61 million for printing and binding as of September 30,. 

2007 and 2006, respectively. Additionally, GPO held advance funds from the Federal Government and other customers of $3.7. 

million and $4 million for sales of publications as of September 30, 2007 and 2006, respectively. The restricted funds in these. 

deposit accounts will generally be applied to future orders placed by customers, or may be refunded on 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 publications in advance of delivery. The revenues from subscriptions are recognized as the periodicals are published and distributed to subscribers. The unfilled subscription balance will be refunded in those instances where the subscription (e.g., monthly periodical) is no longer available for sale,. 

or the customer cancels their subscription. 

The Agency also defers the recognition of revenues for unfilled customer orders of publications and other information products until the customer’s order has been shipped. 

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. 

42. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

. 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 $66,723,000 as of September 30, 2007,. 

and $69,951,000 as of September 30, 2006. Therefore, the accrued liability for workers’ compensation benefits decreased by. 

$3,228,000 during the year ended September 30, 2007. 

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 2007 and 2006 follow. 	 	 

COLA CPIM 

Fiscal Year 2007 2006 2007 2006 

2007	 N/A	 3.50%	 NA	 4.00% 

2008	 2.63%	 3.13%	 3.74%	 4.01% 

2009	 2.90%	 2.40%	 4.04%	 4.01% 

2010	 2.47%	 2.40%	 4.00%	 4.03% 

2011	 2.37%	 2.43%	 3.94%	 4.09% 

2012 and beyond	 2.30%	 2.43%	 3.94%	 4.09% 

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 2007, interest rate assumptions were 4.930 percent in Year 1,. 

and 5.078 percent in Year 2 and thereafter. For 2006, interest rate assumptions were 5.170 percent in Year 1, and 5.313 percent. 

in Year 2 and thereafter. 

10. Commitments

 10. A. Operating Leases 

As of September 30, 2007, 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. 

Future Minimum Rental Payments Required Under Operating Leases 

	 (Dollars in thousands) 

Fiscal Year Warehouse Office Total 

2008	 $	 1,185	 $	 527 	 $	 1,712 

2009	 	 686	 	 436 	 	 1,122 

2010	 	 611	 	 283	 	 894 

2011	 	 153	 	 99	 	 252 

2012	 	 —	 70	 	 70 

	 

Total minimum lease payments $ 2,635 $ 1,415 $ 4,050 

Lease and rental expenses for real and personal property were $3.7 million for fiscal years 2007 and 2006.. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 43 
Section IV: Consolidated Financial Statements 

10. B. Obligations 

GPO had unliquidated obligations of $195.1 million and $176.6 million, at September 30, 2007 and 2006, respectively, of which. 

$166.4 million and $136.5 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. C. Product Warranty Liabilities 

GPO and the U.S. Department of State share responsibility for the replacement of defective e-Passports. The U.S. Department . 

of State is responsible for the cost associated with the replacement of the first 2 percent of blank e-Passports containing defective computer chips. GPO is liable for any warranty expense that exceeds 2 percent of passport books that are deemed to have. 

failed due to GPO production problems. 

The following table summarizes the warranty activity for the year ended September 30, 2007. 

Warranty Liability for U.S. Passports (Dollars in thousands) 

2007 

Beginning Balance (October 1)	 $	 — 

Provision and adjustments	 			4,833 

Cost of replacement U.S. Passports	 	 — 

Ending Balance (September 30)	 $ 4,833 

GPO reserved $4.8 million for product warranty liabilities at September 30, 2007. No product warranty replacement claims were. 

made by the U.S. Department of State in fiscal year 2007. 

11. Contingencies

 11. A. 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. 

As of September 30, 2007 and 2006, GPO has recorded estimated liabilities of $90,000 and $62,000, respectively, related to. 

two claims that management believes the likelihood of an adverse result against GPO is probable. Such amounts are included in. 

accounts payable and accrued expenses in the accompanying balance sheets. 

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 $64,000 and $5,000 on behalf of GPO for the years ended September 30, 2007 and. 

2006, 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 $200,000 as of September. 

30, 2006, and nothing as of September 30, 2007.

 11. B. Environmental Liabilities 

The GPO Central Office in Washington, DC, is located in an industrial facility comprised of four older buildings that contain. 

asbestos building materials. When they were constructed, asbestos was a common building material used as flame retardant,. 

thermal system insulation, and in a variety of building materials (e.g., wall, floor, and ceiling tiles). GPO asbestos abatement. 

efforts have been successful in the removal, enclosure, and encapsulation of friable asbestos to comply with applicable laws. 

and regulations. GPO routinely performs asbestos abatement when unexposed asbestos is detected during building renovation. 

projects. 

44. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

The estimated cost to remove exposed asbestos within the GPO facility, mainly pipe insulation that has been encapsulated,. 

was $570,000 as of September 30, 2007. The costs to remediate all non-visible 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. 

12. Net Position

 12. A. Cumulative Results of Operations 

Retained Earnings — Retained earnings include the net operating results of the GPO Revolving Fund, since inception, less certain required transfers to other Federal agencies. 

Invested Capital — Invested capital represents the resources of the Federal Government that were directly appropriated to the. 

Agency by Congress for investment in GPO assets (land, buildings, equipment, and capital).

 12. B. Unexpended Appropriations 

The following table presents the unexpended appropriation balances from September 30, 2005 through September 30, 2007, for. 

the appropriations made available to GPO. 

	 (Dollars in thousands)	 	 	 

Appropriations 

Revolving 

Fund 

Appropriation 

Salaries and 

Expenses 

Appropriation 

Congressional 

Printing and 

Binding Appropriation Total 

Unexpended balance at September 30, 2005 $ 27,193 $ 5,798 $ 33,394 $ 66,385 

2006 fiscal year appropriation activity: 

Received	 	 1,980 	 	 33,004 	 	 87,209 	 	 122,193	 

Transferred	 	 513	 	 (513)	 —	 	 — 

Expended	 	 (3,453)	 	 (27,172)	 	 (90,190)	 	 (120,815) 

Unexpended balance at September 30, 2006 26,233 11,117 30,413 67,763 

2007 fiscal year appropriation activity: 

Received	 	 1,000 	 	 33,096 	 	 87,954 	 	 122,050	 

Transferred	 	 5,700	 —	 	 	 (5,700) 	 — 

Expended	 	 (13,218)	 	 (29,286)	 	 (95,046)	 	 (137,550) 

Unexpended balance at September 30, 2007 $ 19,715 $ 14,927 $ 17,621 $ 52,263 

As of September 30, 2007, GPO had obligated $17.6 million of the unexpended appropriations available for Congressional. 

Printing and Binding, and $14.9 million of the unexpended appropriations available for Salaries and Expenses. This $32.5 . 

million in obligations is based on the estimated cost of open orders as of September 30, 2007. The obligations totaled $41.5 . 

million at September 30, 2006. This amount consisted of $30.4 million in obligations against Congressional Printing and Binding. 

Appropriations and $11.1 million in obligations against Salaries and Expenses Appropriations. 

In fiscal year 2001, Congress authorized the transfer of $9.5 million to the Revolving Fund from prior year Congressional Printing and Binding Appropriations to cover the cost of congressional work. At the end of fiscal year 2007, a balance of. 

$45,000 was available for future expenditures. In fiscal year 2001, Congress also authorized the transfer of $3.3 million to the. 

Revolving Fund from prior year Salaries and Expenses Appropriations to pay for the printing and distribution of publications to. 

depository libraries. At the end of fiscal year 2007, a balance of almost $1.3 million was available for future expenditures. 

In fiscal year 2005, Congress authorized GPO to transfer $22 million to the GPO Revolving Fund from prior year appropriated funds to finance the development of the FDsys. These funds were also available for annual appropriation shortfalls. The. 

$22 million transfer consisted of $14.6 million from Congressional Printing and Binding Appropriations and $7.4 million from. 

Salaries and Expenses Appropriations. GPO expended $12 million of these appropriated funds. At the end of fiscal year 2007, a. 

balance of $10.0 million was available for future expenditures. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 4 
Section IV: Consolidated Financial Statements 

In 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 $2.1 million from these appropriated funds. At the end of fiscal year. 

2007, a balance of $403,000 was unexpended and available for future expenditures. 

In fiscal year 2006, Congress appropriated $2 million (before rescission of $20,000) to the Revolving Fund for Workforce. 

Retraining. GPO expended a total of $730,000 from the $1,980,000 in available appropriations. At the end of fiscal year 2007,. 

$1,250,000 was available for future expenditures. In fiscal year 2007, Congress appropriated an additional $1 million to the. 

GPO Revolving Fund for Workforce Retraining. At the end of fiscal year 2007, the entire balance of $1 million was available for. 

future expenditures. 

In fiscal year 2007, Congress authorized the transfer of $5.7 million to the GPO Revolving Fund from prior year Congressional Printing and Binding Appropriations to help cover the cost of any shortfalls in this appropriation through fiscal year 2007.. 

At the end of fiscal year 2007, the entire balance of $5.7 million was available for future expenditures. 

13. Appropriated Funds

 13. A. Available Appropriations 

The total net appropriations made available to GPO, after rescissions, for fiscal years 2007 and 2006 were as follows. 

	 (Dollars in thousands) 

2006 

Congressional printing and binding	 $	 87,209	 

Salaries and expenses	 	 33,004 

Workforce retraining	 	 1,980	 

	 Total available appropriations $ 122,193 

2007 

$	 87,954 	 

	 33,096	 

	 1,000 	 

$ 122,050 

46. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

13. B. Expended Appropriations 

The total appropriations expended by GPO during fiscal years 2007 and 2006 were as follows. 

	 (Dollars in thousands) 

2007 2006 

Congressional printing and binding: 	 

	 Congressional Record products	 $	 25,920 	 $	 23,608	 

	 Miscellaneous publications and printing and binding	 	 23,690	 	 20,540 

	 Hearings		 	 19,595 	 	 23,528	 

	 Bills, resolutions, and amendments	 	 11,624 	 	 7,334	 

	 Details to Congress	 	 2,922 	 	 2,699	 

	 Other	 	 	 11,295 	 	 12,481	 

	 Total congressional printing and binding 95,046 90,190 

Salaries and expenses: 	 

	 Depository library distribution	 	 21,235 	 	 21,480	 

	 Cataloging and indexing	 	 6,347 	 	 4,953 

	 By-law distribution	 	 547 	 	 148 	 

	 International exchange	 	 1,157 	 	 591 	 

	 Total salaries and expenses 29,286 27,172 

Revolving Fund: 	 

	 Appropriation transfers	 	 12,749	 	 3,134 

	 Homeland security	 	 — 	 	 58	 

	 Workforce retraining	 	 469 	 	 261	 

Total revolving fund 13,218 3,453 

Total expended appropriations $ 137,550 $ 120,815 

Reconciliation of expended appropriations to the	 	
 

	 consolidated statements of revenues, expenses,	
 

	 and changes in retained earnings: 	 	
 

	 Total expended appropriations $ 137,550 $ 120,815 
 

Eliminations (Intra-agency)	 	 (509)	 	 (1,077)
 

Consolidated revenues from appropriations $ 137,041 $ 119,738 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 4 
Section IV: Consolidated Financial Statements 

14. 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 2007 and 2006 for investigators and law-enforcement officers; and 7 percent of basic pay in both fiscal years for all other employees. GPO’s contributions. 

were $4.4 million and $4.5 million for the fiscal years ended September 30, 2007 and 2006, 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. 

The employer contribution rate to FERS for GPO law enforcement officers was 23.8 percent of basic pay in both fiscal years. 

2007 and 2006. The FERS contribution rate for all other employees was 11.2 percent in both years. GPO contributions to FERS. 

totaled $9.6 million for fiscal year 2007 and $8.8 million for fiscal year 2006. 

Thrift Savings Plan 

The Thrift Savings Plan (TSP) allows employees to defer the recognition of income tax on contributions made to the plan. The. 

TSP elective deferral limit for employees was $15,500 for 2007 and $15,000 for 2006. Employees, who were 50 years or older,. 

were allowed additional catch-up contributions of $5,000 in 2007 and $5,000 in 2006. For FERS employees, the employer is. 

required to make an Agency Automatic 1 percent contribution of the employee’s base pay to the TSP, and to match voluntary. 

employee contributions dollar-for-dollar for the first 3 percent of pay, and 50 cents on the dollar for the next 2 percent of pay.. 

Thus, the employer contribution to the TSP can be up to 5 percent for FERS employees. Employees participating in CSRS may. 

contribute to the TSP, but they do not receive any matching contributions from the employer. GPO made employer contributions to the TSP of $3.2 million in fiscal year 2007 and $3.1 million in fiscal year 2006. 

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. 

$97,500 in 2007 and $94,200 in 2006) 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, 2007 and 2006 totaled $8.0 million and. 

$7.5 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 Care Insurance Program (FLTCIP) before and after their. 

retirement from the Agency. 

Statement of 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. 

4. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006 
Section IV: Consolidated Financial Statements 

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. 

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 $110 in 2007 and $105 in 2006. This employee benefit is provided in the form of either SmartTrip cards or Metrocheks. Transit benefit payments to employees. 

totaled $1.2 million in fiscal year 2007 and $1 million in fiscal year 2006. 

Incentive Program 

The GPO Goal Sharing Program and the Performance Management System provide financial awards and other incentives to Agency employees. These programs reward employees for their achievement of goals and objectives (e.g.,. 

energy conservation efforts). Under the Goal Sharing Program, eligible employees receive 50 percent of measured cost. 

savings or paid time off. Under the Performance Management System, eligible employees may receive an annual bonus. 

for achievement of their goals and objectives. GPO accrued estimated costs of $3.5 million and $2.6 million for incentive programs during fiscal year 2007 and fiscal year 2006, respectively. Annual awards are given to eligible employees. 

in the subsequent fiscal year. 

1. 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, 2007 and 2006. GPO estimates the fair value of financial. 

instruments at September 30, 2007 and 2006 to be the carrying value.. 

16. Major Customers 

GPO’s primary customers are the Congress and large Federal agencies in the Executive Branch of the Federal Government. In fiscal years 2007 and 2006, respectively, revenues from those customers representing 10 percent or more of. 

GPO’s operating revenues follow. 

	 (Dollars in thousands) 

2007 2006 

Amount Percent Amount Percent 

Department of State	 $	 230,424 	 24.54%	 $	 50,733 	 7.0% 

Department of Defense	 	 145,218 	 15.46%	 	 123,004 	 17.1% 

Department of Health & Human Services	 	 97,124 	 10.34%	 	 95,147 	 13.2% 

Congress of the United States	 	 95,477 	 10.17%	 	 91,058 	 12.6% 

Department of the Treasury	 	 77,820 	 8.29%	 	 78,523 	 10.9% 

The increase in revenues from the U.S. Department of State in fiscal year 2007 is attributable to the unprecedented. 

demand for U.S. Passports and the replacement of the legacy passport with the electronic passport. 

UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2006 and 2005 4 
Section IV: Consolidated Financial Statements 

1. Voluntary Separation Incentive Program 

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. No further workforce reductions were necessary during fiscal year 2007. 

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, 2007. The statute authorizing the VSIP did not require retirement contributions to. 

OPM. 

1. Regional Operations 

The GPO Central Office and regional offices work together as a team to serve the Agency’s customers which are located. 

throughout the entire United States and overseas. From time to time, changes in regional operations, such as openings and. 

closings, are necessary to improve customer service and maintain economical and efficient operations. Two major management. 

initiatives changing regional operations occurred during fiscal year 2007. 

GPO completed efforts, started in fiscal year 2006, to reduce leased space at their warehousing and distribution facility in. 

Laurel, Maryland. The total leased space was reduced from 202,000 to 104,460 square feet under this management cost savings. 

initiative. 

The JCP approved GPO plans to establish a new Secure Production Facility (SPF) to manufacture e-Passports on August. 

2, 2007...The estimated development cost of the SPF is about $41.4 million. GPO is committing $1.84 from the sale of each. 

e-Passport to finance the cost of the SPF and new passport production equipment. A total of $27.8 million was committed for. 

this purpose as of September 30, 2007. The new facility is scheduled to be operational in 2008. The new passport production. 

facility will be located at a remote, secure location on Federal Government property leased from another Federal agency. The. 

SPF will increase GPO’s passport production capacity and ensure that GPO continues to satisfy the rising customer demand for. 

U.S. Passports. 

0. UNITED STATES GOVERNMENT PRINTING OFFICE Financial Year in Review — Fiscal Years 2007 and 2006