United States Mint

Annual Report

2007
United States Mint Director Edmund C. Moy

proudly holds the first in a series of 2007

Presidential $1 Coins depicting the likeness

of the first President of the United States –

George Washington.
United States Mint

Annual Report

2007
MISSION STATEMENT

Together, we will provide value 

to the American people, ensure

integrity in our commitments and

communications, and achieve

world-class performance.

UNITED STATES MINT 

VISION

The United States Mint applies

world-class business practices in

making, selling, and protecting

our Nation's coinage and assets.
ANNUAL REPORT

• 3 •

2007

TABLE OF CONTENTS

DIRECTOR’S LETTER..............................................................................................................................................4

MESSAGE FROM THE CHIEF FINANCIAL OFFICER..................................................................................6

MANAGEMENT’S DISCUSSION AND ANALYSIS..........................................................................................7

Operational Overview .....................................................................................................................................8

Financial and Program Analysis.................................................................................................................17

Performance Goals, Objectives, and Results .......................................................................................25

Current and Future Challenges.................................................................................................................28

Analysis of Systems, Controls, and Legal Compliance....................................................................29

LIMITATIONS OF THE FINANCIAL STATEMENTS......................................................................................31

INDEPENDENT AUDITORS’ REPORT.............................................................................................................32

FINANCIAL STATEMENTS..................................................................................................................................34

NOTES TO THE FINANCIAL STATEMENTS.................................................................................................38

REQUIRED SUPPLEMENTARY INFORMATION..........................................................................................56

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL.......................................................58

Exhibit I – Material Weakness....................................................................................................................60

Exhibit II – Status of Prior Year Reportable Conditions..................................................................62

Exhibit III – United States Mint’s Response to Auditor’s Report .................................................64

INDEPENDENT AUDITORS’ REPORTS ON COMPLIANCE AND OTHER MATTERS....................65
Dear Collectors, Customers and Colleagues,

I recently completed my first year as Director of the United States Mint, and I

am pleased to report that the past year has been a very successful one for our

organization. I have been extremely impressed by the hard work and 

dedication of United States Mint employees, and I am heartened to witness the

renewed interest of the American public in our nation’s coinage and what it

represents.

As a boy, I was an avid coin collector, fascinated by the mystery of the images,

and in awe of the remarkable history that the little works of art we call coins

represent. But, like many of us, I reached an age where spending the coins

seemed to take a higher priority than collecting them. From my early days as

a young coin collector, I could never imagine that I would one day have the honor of serving as Director of

the United States Mint. My year of working with our dedicated employees, meeting with collectors, and 

witnessing the renewed public interest in our nation’s coinage has truly reawakened my appreciation for the

coin collecting hobby and for the value of coins in enabling our nation’s commerce.

As you might be aware, our number one priority in Fiscal Year (FY) 2007 was the implementation of the

Presidential $1 Coin Act. I am proud to report that working with our partner, the Federal Reserve Board of

Governors, we successfully launched this program in February with the issuance of the first Presidential $1

Coin, featuring President George Washington. Subsequently, we issued two more coins, featuring Presidents

Adams and Jefferson. By the conclusion of FY 2007, the Federal Reserve had ordered a total of 673 million

Presidential $1 Coins to issue to the public. In addition to this, we had a number of significant achievements

this year, including:

• Transferring $825 million to the Treasury General Fund;

• Producing 15.4 billion coins for circulation;

• Launching several new numismatic products for our collectors and recording $872 million in 

numismatic sales;

• Continuing to work toward optimizing our organizational efficiency by completing the transfer of 

transactional accounting functions to a Center of Excellence shared service provider — 

the Administrative Resource Center of the Bureau of the Public Debt;

• Continuing to make process improvements and leveraging technology, enabling achievements like 

increasing coin design and master tooling output from an average of 70 coin designs per year to a 

record-setting 120, an increase of 70%; 

• Maintaining our continued high rating for customer service as measured by the American Customer 

Satisfaction Survey.

We continued to serve the needs of our collecting community by introducing a number of beautifully designed

and historically significant new products that included:

• The commemorative quarter-dollar coins in the 50 State Quarters® Program honoring South Dakota, 

Montana, Washington, Idaho, and Wyoming;

• The Jamestown 400th Anniversary Commemorative Coin, celebrating the establishment of the first 

permanent English settlement in America;

• The Little Rock Central High School Desegregation 50th Anniversary Commemorative Coin Program, 

commemorating one of the pivotal junctures in our nation’s civil rights movement; and

• 4 •

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

WASHINGTON, D.C. 20220

DIRECTOR

OF THE

MINT December 4, 2007
• The First Spouse Gold Coin Program, featuring one-half ounce, 24-Karat gold, $10 coins 

complementing the issuance of the first three Presidential $1 Coins and featuring Martha Washington, 

Abigail Adams and the Thomas Jefferson “Liberty.” (Note: President Jefferson was not married during 

his terms of office)

Like any organization, we face some significant challenges, the most important of which is the continuing rise

in the prices of copper, nickel and zinc — the main components of our circulating coinage. To meet this 

challenge, we continue to find ways to reduce our non-metal production costs. We have worked with the

Department of the Treasury and Congress to examine solutions to mitigate the effect of rising metal prices

on circulating coinage. We submitted to Congress a legislative proposal that would allow the Treasury

Secretary to alter coin composition to less expensive materials, and as a result, Congress introduced legislation, entitled the “Coinage Materials Modernization Act of 2007.” This bill, if passed, is estimated to save

the government approximately $100 million annually. 

Fiscal Year 2008 will be another very busy and productive year for the United States Mint. We look forward

with a sense of celebration, and some sadness, to the last calendar year of production for the 50 State

Quarters Program. This rotating design program has been a landmark success in our goal to educate the

American public with our nation’s heritage. We are also excited to launch the next four Presidential $1 Coins

featuring Presidents James Madison, James Monroe, John Quincy Adams, and Andrew Jackson. We will

work diligently to make the second year of the Presidential $1 Coin Program successful. In addition, the

American Bald Eagle Recovery and National Emblem Commemorative Coin Act authorizes the minting of

gold, silver and clad commemorative coins celebrating a truly remarkable conservation success story — the

recovery and restoration of our national emblem, the American Bald Eagle.

As I begin the second year of my tenure as Director of the United States Mint I am proud to say we have 

formulated a strong Strategic Plan and have taken great strides in setting high standards in our new vision

and mission for the United States Mint. We will be focusing on the following five overarching goals:

• Establishing and reinforcing the exclusive brand identity of the United States Mint;

• Creating and executing the most effective coin and medal portfolio strategy;

• Achieving greater excellence in coin and medal design;

• Increasing operational efficiency while meeting the highest quality standards; and

• Developing an optimal workforce and workplace culture. 

We are proud of our achievements in FY 2007, and the employees of the United States Mint remain firmly

committed in FY 2008 to continue meeting the nation’s needs for coinage and to offer our collectors the finest

numismatic products. Our vision for the future is; “To embody the American spirit through the creation of

our nation’s coins and medals.” To that end, we will continue to provide the highest quality coinage that

illustrates our great heritage and history. We believe in what we do at the United States Mint, and we want

the American people to see this dedication in every product we deliver.

Sincerely,

Edmund C. Moy

Director

• 5 •
December 4, 2007

I am pleased to present the United States Mint’s financial statements as an integral part of the Fiscal Year

(FY) 2007 Annual Report. As an organization, our priority is to report accurate financial data, while at the

same time achieving the highest levels of discipline and accountability in the execution of our fiscal 

responsibilities to the American people. For FY 2007, our independent auditors rendered an unqualified

opinion. The United States Mint remains committed to achieving superior performance and to making 

significant improvements to its system of financial management control. 

The United States Mint had a very productive and successful year. This year, we launched the Presidential

$1 Coin Program honoring Presidents Washington, Adams and Jefferson, issuing a total of 673 million coins

to the Federal Reserve by September 30, 2007. We are proud to report that, as a result of our FY 2007 

operations, the United States Mint was able to transfer $825 million to the Treasury General Fund.

This year, as part of our program to meet the mandates of the President’s Management Agenda, we completed

the transfer of our Enterprise Resource Planning System and many of our transactional finance and 

accounting activities to a Center of Excellence shared service provider—the Administrative Resource Center

(ARC) of the Bureau of the Public Debt. This initiative is intended to eliminate duplication of systems, reduce

capital expenditures, and promote greater standardization within the federal government. This process is

expected to increase efficiency at the United States Mint and will allow us to focus more of our staff resources

on mission-critical needs of the bureau. 

Strong financial management continues to be a key strategic focus for the United States Mint. Under OMB

Circular A-123 “Management’s Responsibility for Internal Control” guidelines, we completed a full-scope 

A-123 program review. Based on the results of this evaluation, the United States Mint identified several 

deficiencies and determined that a material weakness had resulted as of June 30, 2007 for FY 2007.

Management determined that the material weakness had a root cause centering around changes to the 

organization and processes resulting from the conversion to our new Enterprise Resource Planning System.

This significant change in systems required the United States Mint to redesign and implement new and/or

revised controls and reporting processes. We are committed to maintaining effective systems of internal 

control; therefore, subsequent to the determination that a material weakness existed, we took aggressive steps

to implement corrective actions to resolve the material weakness. Significant progress has been made and the

remaining issues will be resolved in the near future. 

The United States Mint prepared its financial statements in compliance with accounting standards issued by the

Federal Accounting Standards Advisory Board (FASAB). The FASAB is designated by the American Institute of

Certified Public Accountants as the standard-setting body for the financial statements of federal government

entities, with respect to the establishment of United States Generally Accepted Accounting Principles.

We closed FY 2007 continuing to provide the American people with the highest quality products and 

exceptional financial results. We look forward to continuing this 215 year-old tradition of service to the

American public and our collectors in Fiscal Year 2008.

Sincerely,

Patricia M. Greiner

Chief Financial Officer

• 6 •

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

WASHINGTON, D.C. 20220
ANNUAL REPORT

OVERVIEW

The United States Mint’s financial statements are prepared pursuant to Public Law 104-52. The financial

statements represent the operations of the entire United States Mint, composed of the circulating, numismatic,

bullion, and protection programs. The Management’s Discussion and Analysis section provides an 

operational overview and serves to explain the financial statements as well as to explain program 

performance. The United States Mint uses a set of key performance indicators to manage operations. An

analysis of the United States Mint’s success in achieving these performance goals is included in this section.

MISSION OF THE UNITED STATES MINT

The United States Mint applies world-class business practices in making, selling, and protecting our Nation’s

coinage and assets. 

ORGANIZATIONAL STRUCTURE

• 7 •

2007

MANAGEMENT’S DISCUSSION AND ANALYSIS
UNITED STATES MINT 

OPERATIONAL OVERVIEW

Since Fiscal Year (FY) 1996, the United States Mint has operated under the United States Mint Public

Enterprise Fund (PEF). As authorized by Public Law 104-52 (31 U.S.C. § 5136), the PEF eliminates the need

for appropriations to the United States Mint. Proceeds from the sale of circulating coins to the Federal

Reserve Banks and to the public, and the sale of numismatic products and bullion coins to customers 

worldwide, are the sources of funding for United States Mint operations. Revenues in excess of costs and

obligations are returned to the United States Treasury General Fund on an annual basis.

MANAGEMENT STRATEGIC PRIORITIES

The United States Mint continually seeks to be a model government agency that applies modern business

practices, resulting in higher yields, lower costs, proper use of technology, efficient production, timely 

delivery of products and exceptional customer service. Management’s strategic priorities for FY 2007

include:

• Be a model government agency that matches world-class business practices

• Value and communicate with the American people

• Design, sell, and deliver quality products

• Foster a model workplace

BE A MODEL GOVERNMENT AGENCY THAT MATCHES WORLD-CLASS 

BUSINESS PRACTICES

The United States Mint is committed to continually improving the efficiency of its operations. During FY

2007, the United States Mint focused on five key areas: 1) keeping Sales, General and Administrative

(SG&A) expenses as low as possible while maintaining the quality that the public and customers expect from

our products; 2) reducing our facilities’ costs by completing office consolidation efforts; 3) transferring many

transactional functions in accounting and procurement to a shared-service provider; 4) continuing business

process improvements in Manufacturing and Sales and Marketing to increase the efficiency of the production

process; and 5) reducing the costs of maintaining a strong and efficient program to protect the assets of the

United States Mint and the nation.

Sales, General and Administrative (SG&A) Expenses: These are the overhead costs associated with 

operating the United States Mint. In a production-oriented agency like the United States Mint, emphasis is

placed on minimizing SG&A costs while ensuring compliance with statutory requirements. Minimizing

SG&A costs allows us to keep our circulating and numismatic production costs as low as possible, which, in

turn, also allows us to keep our numismatic product prices low. Ultimately, the result is greater transfers to

the Treasury General Fund. In FY 2007, SG&A costs decreased to $174.0 million compared to $177.5 

million in FY 2006.

Facilities Management: The United States Mint continues to review the utilization of space at the agency’s

Headquarters in Washington, DC. To maximize efficiency, the United States Mint subleased approximately

182,000 square feet of Headquarters office space in Washington, DC. This resulted in leasing cost savings

of approximately $8.4 million in FY 2007, up from $7.9 million in FY 2006.

• 8 •
ANNUAL REPORT

Shared Services: Under the Office of Management and Budget’s Line of Business Initiative, federal agencies

are expected to either provide certain shared services as a Center of Excellence, or consider migrating to a

designated Center of Excellence. In FY 2007, the United States Mint transferred many of its finance and

accounting functions to the Administrative Resource Center (ARC), along with the operation of its Enterprise

Resource Planning (ERP) System, procurement, and e-travel functions. The United States Mint performed

system cutover on October 1, 2006, and officially went “live” October 2, 2006. During this first year of

operation, the United States Mint developed and conducted six customized workshops that were intended to

provide United States Mint employees with customized, hands-on, and process-specific training as a 

supplement to the training provided by the ARC. The six workshops included: Counting Inventory, Advance

Cycle Counting, Cost Management, Outside Processing, Period End Manufacturing Activities, and Financial

Data Overview, and were delivered at all sites. Participants found the training to be a useful refresher as well

as a source of new skills and knowledge. 

Improved Business Processes: In FY 2007, the United States Mint completed training for many managers in

Manufacturing on “Lean Manufacturing” processes and in Sales and Marketing on effective project 

management skills. This continual process improvement in Manufacturing and Sales and Marketing will serve to

eliminate unnecessary or redundant practices and should lead to substantial improvements in plant 

productivity and reduction in controllable operating costs. Several significant achievements for FY 2007 include:

• Overcame significant issues with cutting edge technologies used to produce Presidential $1 Coins. 

These issues include improving the coin’s luster, using edge lettering on a circulating coin, and 

modifying product packaging with automated robotics. We resolved our edgeless coin quality issue,

by implementing safeguards and investing in capital to redesign the production line.

• Increased coin design and master tooling output from an average of 70 coins per year to a recordsetting 120 for FY 2007, demonstrating an increase of 70% by infusing and leveraging digital technology.

• Developed an inventory management pilot program jointly with the Federal Reserve Board (FRB) to 

more effectively meet the demands of the public and create a more stable circulating coin production 

system.

Next year Manufacturing intends to focus on two areas for Lean improvement – the Die Shop at the United

States Mint at Philadelphia and Headquarters Field process for entering new information in Oracle.

Management is committed to implementing more efficient and cost effective procedures throughout all areas

of the United States Mint.

Protection of Assets: The United States Mint continues to use a strategic approach to reduce its Protection

costs. The United States Mint plans to use automation to replace certain functions currently performed by

its police officers. For instance, the installation of electronic systems can verify identity and scan for weapons

and explosives. This procedure upon entry to and exit from each facility can eliminate a process currently

conducted by police officers. Once the electronic equipment is fully implemented, the United States Mint will

be able to reduce positions, and improve the effectiveness of the scanning process. 

VALUE AND COMMUNICATE WITH THE AMERICAN PEOPLE

During FY 2007, the United States Mint continued to improve communications with its stakeholders, 

customers, and the American public. This included continuing the innovative and critically acclaimed United

• 9 •

2007
UNITED STATES MINT 

States Mint “History In Pocket” (H.I.P.) Pocket ChangeTM educational website and conducting a number of

open collector forums around the nation.

United States Mint H.I.P Pocket Change Website: Educational content was added to the United States Mint

H.I.P. Pocket Change website. The interactive Time Machine cartoon was updated quarterly with trips to

the Suffrage (1917), Great Depression (1935) and World War II (1943) eras with an emphasis on coins. The

online newsletter, Making Cents, was updated quarterly, as was a “State Quarter Day in the Classroom” page

with the release of each 50 State Quarters® coin. The “Coin of the Month” section provided a historical 

perspective of a different coin each month. The United States Mint H.I.P. Pocket Change website had over

3.8 million visits during the year, an increase of 24% over FY 2006. 

Collector Forums: In FY 2007, the United States Mint hosted five collector forums at which collectors and

the general public could view the newest products and pose questions and ideas related to coin programs to

United States Mint officials. The forums were held the evening before each State Quarter launch ceremony

in South Dakota, Washington, and Wyoming, and at the Spring and Summer American Numismatic

Association conventions in Charlotte and Milwaukee.

American Customer Satisfaction Index (ACSI): The United States Mint was among the highest in 

government for high standard of customer service (87%) measured by the ACSI. One of the critical elements

in this survey was measuring overall order fulfillment to the FRB and to the public. The United States Mint

also participates in the quarterly ACSI E-Government Customer Satisfaction Survey. The scores of 80 in the

e-commerce/transactions category and 79 in the portals/main sites category outpaced the average government

score of 76.8 and 72.6, respectively. The United States Mint’s e-commerce/transactions scored the same as

the overall private sector e-commerce score.

Coin Users Group Forums: In accordance with the Presidential $1 Coin Act of 2005, (Public Law 109-145),

the United States is honoring the nation’s Presidents by issuing a series of circulating $1 coins, featuring the

image of each President in the order in which he served. The Act requires the Board of Governors of the

Federal Reserve System and the Secretary of the Treasury to take steps to ensure that an adequate supply of

$1 coins is available for commerce and collectors. There are further requirements to consult with coin users

groups to secure ideas for the efficient distribution and circulation of $1 coins, as well as all other 

circulating coins. 

To this end, several coin users group forums have been hosted jointly by the United States Mint and the FRB.

Two such forums were held in FY 2007. The first forum, on November 8, 2006, was specifically for 

representatives from the retail industry. The United States Mint and the FRB hosted another coin users group

forum on July 12, 2007, with representatives from all stakeholder groups. These forums have been 

beneficial in identifying barriers to robust circulation of coins and ideas to overcome or mitigate those barriers.

As a result, actions and operational changes have been revised or established, thus streamlining the ordering and

distribution processes as well as facilitating more effective communication and information channels.

DESIGN, SELL, AND DELIVER QUALITY PRODUCTS

The United States Mint continually strives to provide the highest quality products along with services that

are responsive to our customers’ needs and desires. At the same time, our goal is to provide excellent 

customer service that meets the best in business standards; FY 2007 was no exception. 

• 10 •
ANNUAL REPORT

FY 2007 NEW PRODUCTS AND PROGRAMS

The Presidential $1 Coin Program

The United States is honoring our nation’s Presidents by issuing $1 

circulating coins featuring their images in the order that they served, 

beginning in calendar year 2007 with Presidents Washington, Adams,

Jefferson and Madison. The United States Mint will mint and issue four

Presidential $1 Coins per year, and each will have a reverse design featuring

a striking rendition of the Statue of Liberty. 

The composition of the new Presidential $1 Coins

is identical to that of the Golden Dollar 

featuring Sacagawea. 

The Presidential $1 Coin Act seeks to revitalize

the design of United States coins and return

circulating coinage to its position as an object

of aesthetic beauty in its own right. Accordingly,

the new Presidential $1 Coins feature larger, more 

dramatic artwork, as well as edge-incused inscriptions of the year of

issuance, “E Pluribus Unum,” “In God We Trust,” and the mint mark. 

Modeled after the United States Mint’s successful 50 State Quarters Program,

the Presidential $1 Coin Program features rotating designs of United States

Presidents. The George Washington Presidential $1 Coin marked the first of

three Presidential $1 Coins released in FY 2007, followed by John Adams and

Thomas Jefferson, with James Madison’s release scheduled in the calendar

year on November 15. For the three Presidential $1 Coins released in FY

2007, the Federal Reserve ordered 673 million coins for circulation. Public

awareness of the new Presidential $1 Coins has increased from a 

pre-introduction level of 18% to 62%. The unveiling of all four designs for

the 2007 Presidential $1 Coins was held on November 20, 2006, at the

Smithsonian National Portrait Gallery in Washington, DC. The media event

took place in front of the original Gilbert Stuart painting of George

Washington. All of the media events listed, as well as ongoing media 

outreach and a local media tour, led to more than 1 billion audience 

impressions for the Presidential $1 Coin Program in FY 2007.

George Washington Presidential $1 Coin

First President, 1789-1797

On February 15, 2007, the United States Mint released into circulation the

new George Washington Presidential $1 Coin. The United States Mint 

celebrated the debut of the George Washington $1 Coin with a special

Presidential $1 Coin Exchange in New York City featuring a brigade of

armored cars delivering the coins to Grand Central Terminal. 

• 11 •

2007
UNITED STATES MINT 

John Adams Presidential $1 Coin

Second President, 1797-1801

On May 17, 2007, the United States Mint released into circulation the John Adams Presidential $1 Coin. On

May 22, 2007, Quincy, Massachusetts, the hometown of John Adams, hosted a ceremony to commemorate

the first time that John Adams has been featured on a U.S. coin. 

Thomas Jefferson Presidential $1 Coin

Third President, 1801-1809

On August 16, 2007, the United States Mint released into circulation the Thomas Jefferson Presidential $1

Coin. The Thomas Jefferson $1 Coin launch and coin exchange was held at the Jefferson Memorial in

Washington, DC, on August 15, 2007. The launch featured United States Mint Director Edmund C. Moy’s

release of the results of a national survey commissioned by the United States Mint to test citizens’ knowledge

of America’s Presidents. 

James Madison Presidential $1 Coin

Fourth President, 1809-1817

The James Madison Presidential $1 Coin is scheduled for release in FY 2008 on November 15, 2007.

The First Spouse Gold Coin Program

The United States is honoring our nation’s first spouses by

issuing one-half ounce $10 gold coins featuring their

images, in the order that they served as first spouse,

beginning in 2007 with Martha Washington, Abigail

Adams, Thomas Jefferson’s Liberty and Dolley

Madison. The Presidential $1 Coin Act of 2005

authorized the First Spouse, 24-Karat, Gold Coins

as collectible counterparts of the circulating

Presidential $1 Coins. The United States Mint also

produced bronze medals bearing the likeness of the

First Spouse Gold Coins.

The First Spouse Gold Coins mark the first time the

United States Mint has featured women on a 

consecutive series of coins. The obverse of these coins

feature portraits of the nation’s first spouses, their

names, and the dates and order of their years as first

spouse. Each coin has a unique reverse design featuring

an image emblematic of that spouse’s life and work. The

Program has proven to be extremely popular, with both

proof and uncirculated versions of each First Spouse Gold Coin

selling out on the day of release, a total of 40,000 coins per first

spouse design.

• 12 •
ANNUAL REPORT

When a President served without a first spouse, such as Thomas Jefferson, a gold coin will be issued bearing

an obverse image emblematic of Liberty as depicted on a circulating coin of that era, and bearing a reverse

image emblematic of themes of that President. 

Martha Washington First Spouse $10 Gold Coin

First Lady, 1789-1797

The Martha Washington First Spouse $10 Gold Coin went on sale June 19, 2007. The obverse bears an

image of Martha Washington, and the reverse design depicts the future first lady sewing a button onto her

husband’s uniform jacket. During the Revolutionary War, her concern for the colonial soldiers earned her

their lasting respect and admiration. 

Abigail Adams First Spouse $10 Gold Coin

First Lady, 1797-1801

The Abigail Adams First Spouse $10 Gold Coin went on sale June 19, 2007. The obverse bears an image of

Abigail Adams, and the reverse design depicts her writing a letter, with the words “Remember the Ladies” as

she wrote to her husband, John, as he was with the other Founding Fathers creating the framework for the

new Republic. 

Thomas Jefferson Liberty First Spouse $10 Gold Coin

President 1801-1809

The Thomas Jefferson Liberty First Spouse $10 Gold Coin went on sale August 30, 2007. The obverse

image emblematic of Liberty appeared on the Draped Bust Half-Cent coin from 1800 to 1808. The reverse

design depicts Jefferson’s final resting place located on the grounds of his Monticello estate. 

Dolley Madison First Spouse $10 Gold Coin

First Lady, 1809-1817

The fourth in the series of First Spouse $10 Gold Coins is scheduled to be released in FY 2008 on November 29,

2007.

THE 50 STATE QUARTERS PROGRAM:

(a 10-year celebration of our national heritage) 

A significant portion of United States Mint operations is dedicated to the 50 State Quarters Program, which

was introduced in 1999 to commemorate each of the 50 states over a ten-year period. Five new 

commemorative quarter-dollar coins are minted and issued each year. The reverse of each quarter-dollar coin

celebrates one of the 50 states with a design honoring the unique history, traditions and symbols of the state.

The quarter-dollars are released in the order in which the states ratified the United States Constitution or were

admitted into the Union. In FY 2007, the United States Mint issued quarter-dollars commemorating South

Dakota, Montana, Washington, Idaho and Wyoming.

• 13 •

2007
UNITED STATES MINT 

FY 2007 50 STATE QUARTERS COIN RELEASES

South Dakota: The first quarter released in FY 2007 honors the

State of South Dakota, the “Mount Rushmore State,” and is the

40th coin in the United States Mint’s 50 State Quarters Program.

The South Dakota quarter features an image of the State bird, a

Chinese ring-necked pheasant, in flight above a depiction of the

Mount Rushmore National Monument. The design is bordered by

heads of wheat. The coin’s design also bears the inscriptions

“South Dakota,” “1889,” and “2006.” 

Montana: The second quarter released in FY 2007 honors

Montana, and is the 41st coin in the United States Mint’s 50 State

Quarters Program. The reverse of Montana’s quarter features a

bison skull depicted above the diverse Montana landscape with the

inscription “Big Sky Country.” The coin also bears the inscriptions

“Montana,” “1889,” and “2007.” 

Washington: The third quarter released in FY 2007 honors

Washington State, and is the 42nd coin in the United States Mint’s

50 State Quarters Program. The reverse of Washington’s quarter

features a king salmon breaching the water in front of majestic

Mount Rainier. The coin bears the inscriptions “The Evergreen

State,” “Washington,” “1889,” and “2007.” 

Idaho: The fourth commemorative quarter-dollar coin released in

FY 2007 honors Idaho, and is the 43rd coin in the United States

Mint’s 50 State Quarters Program. The reverse of Idaho’s quarter

features the Peregrine Falcon imposing its presence above an 

outline of the State of Idaho. The coin bears the inscriptions “Esto

Perpetua” (the State motto which means, “May it be Forever”),

“Idaho,” “1890,” and “2007.” 

Wyoming: The fifth and final quarter released in FY 2007 honors

Wyoming, and is the 44th coin in the United States Mint’s 50 State

Quarters Program. The reverse of Wyoming’s quarter features a

bucking horse and rider with the inscriptions “The Equality State,”

“Wyoming,” “1890,” and “2007.” 

• 14 •
ANNUAL REPORT

FY 2007 COMMEMORATIVE COINS

2007 Jamestown 400th Anniversary Commemorative Coin Program:

Four hundred years after the settlement of Jamestown, the

United States is honoring the founding of Jamestown with

two commemorative coins from the United States Mint.

The Jamestown 400th Anniversary Commemorative

Coin Program includes two commemorative coins —

a silver dollar, minted at the United States Mint at

Philadelphia and a $5 gold coin, minted at the United

States Mint at West Point — available in both proof

and uncirculated conditions.

The obverse of the silver dollar, “Three Faces of

Diversity,” represents the three cultures that came

together at Jamestown, while the reverse features

an image of the three ships which brought the

first settlers to Jamestown in 1607. The

obverse of the $5 gold coin depicts an image

of Captain John Smith greeting a Native

American carrying a bag of corn. The reverse

features a current rendering of Jamestown

Memorial Church, the only remaining 

original structure in Jamestown.

Authorized by Public Law 108-289, the 2007

Jamestown 400th Anniversary Commemorative

Coins are limited to maximum mintages across all 

product options of 500,000 for the silver dollar and 100,000 for the $5 gold coin. Surcharges from the 

program are authorized to support the 400th anniversary programs, such as promoting understanding, 

continuing preservation, and improving the infrastructure of Jamestown, among other commemorative

events. These programs are conducted by, and the surcharges are authorized to be paid to the JamestownYorktown Foundation of the Commonwealth of Virginia, the Secretary of the Interior, and the Association

for Preservation of Virginia Antiquities. 

2007 Little Rock Central High School Desegregation 

50th Anniversary Program: 

The second United States Mint commemorative coin program of FY 2007 commemorates a major event in

the Civil Rights movement. Public Law 109-146 directs the Secretary of the Treasury to mint up to 500,000

silver dollars in commemoration of the 50th anniversary of the desegregation events at Little Rock Central

High School in Little Rock, Arkansas, during the 1957-58 school year. The coin is available in proof and

uncirculated condition, minted at the United States Mint at Philadelphia.

• 15 •

2007
UNITED STATES MINT 

The obverse of this coin depicts students, walking to

school, accompanied by an armed United States soldier.

The design includes nine stars, symbolic of the “Little

Rock Nine,” who bravely faced the violence and hatred

of a segregated society. The reverse depicts the image of

the school circa 1957. 

Surcharges collected through the sale of these coins are

authorized to be paid to the Secretary of the Interior for

the protection, preservation, and interpretation of

resources and stories associated with the Little Rock

Central High School National Historic Site. These

include site improvements at Little Rock Central High

School National Historic Site, development of 

interpretive and education programs and historic 

preservation projects, and the establishment of 

cooperative agreements to preserve or restore the 

historic character of the Park Street and Daisy L. Gatson

Bates Drive corridors adjacent to the site.

FOSTER A MODEL WORKPLACE

Equal Employment Opportunity (EEO)/Diversity: The United States Mint continues ongoing efforts to

develop and retain an optimal diverse workforce and workplace culture by utilizing human resources 

flexibilities when possible, and by addressing conflicts at the lowest level. In FY 2007, a number of EEO

events were sponsored emphasizing key areas relevant to EEO and specific diversity initiatives. In FY 2007,

the EEO office administered the No Fear Act and Prevention of Sexual Harassment (POSH) training for

100% of the workforce. The positive outcomes from these efforts include, enhanced awareness of diversity

initiatives, and a better understanding of the EEO complaint process, and other conflict resolution resources

available to the workforce.

Safety: Our vision is to implement a sustainable safety process that demonstrates continuous improvement

towards zero injuries. The primary method used to drive continuous improvement is the United States Mint’s

safety reporting system which tracks progress at the facility and bureau levels. The metrics are designed to

meet, and in most cases exceed, the President’s SHARE (Safety Health And Return to Employment) Initiative.

After reducing the Lost Time Accident (LTA) rate for six consecutive years, the United States Mint suffered

a slight setback, and the end rate for FY 2007 was 0.88 compared to 0.79 for FY 2006. Based on the 

metrics, the United States Mint initiated a program targeted at the safety culture within the Mint Police force.

There were efforts to revitalize the safety culture change at the United States Mint at Philadelphia, with the

intent of migrating successes to the other United States Mint facilities. The United States Mint also audited

the employee interface and employee perception of safety programs at the various locations, creating a list of

action items for improving program guidance to the field. The United States Mint is diligently committed to

obtaining zero injuries throughout the entire workforce.

• 16 •
ANNUAL REPORT

FINANCIAL AND PROGRAM ANALYSIS

OPERATING RESULTS

The following section provides a summary of the operating results for the United States Mint’s various 

programs and circulating coinage. 

TOTAL EARNED REVENUE AND OTHER

FINANCING SOURCES (SEIGNIORAGE)

In FY 2007, the United States Mint’s earned revenue

increased to $1,603.1 million plus other financing sources

(seigniorage) of $1,032.3 million totaling $2,635.4 million.

This compares with FY 2006 amounts of $1,641.1 million

for earned revenue plus $682.4 million for other financing

sources, totaling $2,323.5 million.

CIRCULATING COINAGE SHIPPED TO THE

FEDERAL RESERVE BANKS

The United States Mint mints and issues the circulating

coins used to conduct commercial transactions across the

Nation. Coins are shipped to the FRB as they are needed to

replenish inventory and fulfill commercial demand. The

FRB pays the United States Mint face value for the coins

when they are shipped. 

CIRCULATING EARNED REVENUE AND OTHER

FINANCING SOURCES

Earned revenue from circulating coinage equals the costs

(metal, manufacturing, and transportation) incurred to

make and distribute the coin, while “other financing

sources” (also known as seigniorage) represents the 

difference between the cost to make the coin and the face

value received from the FRB. Circulating earned revenue

from coins shipped to the FRB of $722.6 million plus the

circulating other financing sources of $1,005.2 million

increased to $1,727.8 million in FY 2007. This compares

with $603.4 million in earned revenue plus $668.5 million

from other financing sources, totaling $1,271.9 million in FY

2006.

• 17 •

2007

Total Earned Revenue and Other Financing Sources

2,323.5

2,635.4

1,603.1 1,641.1

1,032.3 682.4

-

500

1,000

1,500

2,000

2,500

FY 2007 FY 2006

Earned Revenue Other Financing Sources

500

1,000

1,500

2,000

2,500

Circulating Earned Revenue and Other 

Financing Sources

1,727.8

1,271.9

722.6 603.4

1,005.2

668.5

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

FY 2007 FY 2006

Other Financing Sources

Earned Revenue (Gross Circulating Cost)

-

200

400

600

800

1,000

1,200

1,400
UNITED STATES MINT 

CIRCULATING COIN COSTS

FY 2007 was a particularly challenging year given significant increases in the prices of nickel, zinc and 

copper — the three primary components of our circulating coinage. High metal prices continued to have a

significant effect on production costs, causing the one-cent and 5-cent denominations to cost more than their

face values for the second fiscal year in a row. 

• 18 •

CIRCULATING EARNED REVENUE & OTHER FINANCING SOURCES (OFS) (in Millions)

FOR THE YEAR ENDED SEPTEMBER 30, 2007

One-cent 5-cent Dime Quarter Half Dollar

Mutilated &

Other Total

Revenue & OFS $78.1 $64.4 $224.8 $677.8 $0.0 $682.7 $0.0 $1,727.8

Cost of Goods Sold 118.2 122.9 80.2 228.1 0.0 55.3 0.0 604.7

Selling, General & Administrative 0.0 0.0 10.9 34.0 0.0 48.6 0.0 93.5

Other Costs and Expenses 0.0 0.0 1.0 3.2 0.0 4.6 15.6 24.4

Other Financing Sources -$40.1 -$58.5 $132.7 $412.5 $0.0 $574.2 -$15.6 $1,005.2

CIRCULATING EARNED REVENUE & OTHER FINANCING SOURCES (OFS) (in Millions)

FOR THE YEAR ENDED SEPTEMBER 30, 2006

One-cent 5-cent Dime Quarter Half Dollar

Mutilated & 

Other Total

Revenue & OFS $85.0 $72.6 $301.9 $751.1 $1.0 $60.3 $0.0 $1,271.9

Cost of Goods Sold 103.3 87.1 87.6 203.5 0.4 2.4 0.0 484.3

Selling, General & Administrative 0.0 0.1 24.5 63.3 0.0 6.7 0.0 94.6

Other Costs and Expenses 0.0 0.0 2.3 5.9 0.0 0.6 15.7 24.5

Other Financing Sources -$18.3 -$14.6 $187.5 $478.4 $0.6 $50.6 -$15.7 $668.5

UNIT COST OF PRODUCING AND DISTRIBUTING COINS

FOR THE YEAR ENDED SEPTEMBER 30, 2007

One-cent 5-cent Dime Quarter Half Dollar

Cost of Goods Sold $0.0165 $0.0949 $0.0357 $0.0841 $0.0000 $0.0835

General & Administrative 0.0000 0.0000 0.0048 0.0125 0.0000 0.0705

Distribution to FRB 0.0002 0.0004 0.0004 0.0012 0.0000 0.0033

Total Expenses $0.0167 $0.0953 $0.0409 $0.0978 $0.0000 $0.1573

UNIT COST OF PRODUCING AND DISTRIBUTING COINS

FOR THE YEAR ENDED SEPTEMBER 30, 2006

One-cent 5-cent Dime Quarter Half Dollar

Cost of Goods Sold $0.0119 $0.0592 $0.0294 $0.0681 $0.1729 $0.0495

General & Administrative 0.0000 0.0001 0.0081 0.0211 0.0000 0.1092

Distribution to FRB 0.0002 0.0004 0.0003 0.0015 0.0020 0.0008

Total Expenses $0.0121 $0.0597 $0.0378 $0.0907 $0.1749 $0.1595
NUMISMATIC PRODUCTS SOLD TO THE PUBLIC

The United States Mint also produces and sells a variety of numismatic products directly to the public, and

precious metal (gold, silver, and platinum) investment grade bullion coins to pre-qualified Authorized

Purchasers for resale to the public. Total numismatic revenue plus other financing sources, and numismatic

revenue plus other financing sources as a proportion of total United States Mint revenue, has been growing

over the past three fiscal years. In FY 2007, numismatic revenue plus other financing sources represented 34

percent of total United States Mint revenue. 

American Eagle Bullion Coins: American Eagle bullion

coins are typically purchased by investors seeking a simple,

tangible means to own and invest in precious metals. These

coins are made in gold (22K), silver, and platinum.

American Eagle silver bullion sales decreased to 7.8 million

fine troy ounces (FTOs) and revenue decreased to $110.2

million in FY 2007, compared with 11.2 million FTOs sold

and $130.5 million in revenue in FY 2006. American Eagle

gold bullion sales decreased to 164 thousand FTOs in FY

2007, and revenue decreased to $110.3 million, compared

with 395 thousand FTOs and $222.9 million in revenue in

FY 2006. American Eagle platinum bullion sales increased

to 14.6 thousand ounces, while revenue increased to $18.1

million in FY 2007, compared to 14.5 thousand ounces, and

$15.5 million in revenue in FY 2006. In FY 2007, total

American Eagle bullion revenues decreased to $238.6 

million compared with $368.9 million in FY 2006. 

American Eagle Proof, Uncirculated and 20th Anniversary

Sets: American Eagle Proof coins are made in gold (22K),

silver, and platinum. American Eagle Gold Proof coin sales

increased to 182.9 thousand units, and revenue increased to

$65.8 million in FY 2007. This compares with 166.6 

thousand units sold and $55.2 million in revenue in FY

2006. American Eagle Silver Proof sales decreased to 767.0

thousand units sold with $22.60 million in revenue. This 

compares to 818.7 thousand units sold in 2006 with $22.6

million in revenue. American Eagle Platinum Proof sales

decreased to 26.2 thousand units and $19.0 million in 

revenue in FY 2007. This compares with 32.8 thousand

units sold and $22.2 million in revenue in FY 2006.

American Eagle Proof net program revenues decreased to

$12.9 million in FY 2007 from $16.4 million in FY 2006.

The American Eagle Uncirculated coins were made available

late in 2006 with shipping and revenues not realized until

2007. The American Eagle Uncirculated Gold sold 113.2

thousand units with $36.2 million in revenue, the American

Eagle Uncirculated Silver sold 623.0 thousand units with

$13.1 million in revenue and the American Eagle

American Eagle Bullion Cost and Net Program Revenue

238.6

368.9

235.8

359.7

2.8

9.2

-

50

100

150

200

250

300

350

400

FY 2007 FY 2006

Net Program Revenue

Gross Numismatic Cost

-

50

100

150

200

250

300

350

ANNUAL REPORT

• 19 •

2007

American Eagle Proof, Uncirculated, 

and Anniversary Cost and Net Program 

117.5

220.1

190.5

100.0

29.6

17.5

-

50

100

150

200

250

FY 2007 FY 2006

Net Program Revenue

Gross Numismatic Cost

-

50

100

150

200
UNITED STATES MINT 

Uncirculated Platinum sold 21.8 thousand units with $13.7

million in revenue. The American Eagle Uncirculated net

program revenue was $7.5 million. The 20th Anniversary

Sets net program revenues for FY 2007 were $9.1 million on

revenues of $49.7 million which compares to the net 

program revenues of $1.1 million and revenues of $17.5 

million in 2006.

American Buffalo Gold Bullion Coins: FY 2007 marked the

second year for the American Buffalo Gold Bullion Coin.

This is the first 24-Karat gold coin produced by the United

States Mint. In accordance with Title II of Public Law 109-

145 (Presidential $1 Coin Act of 2005), as codified at 31

U.S.C. § 5112(a)(11) & (q), the coin is produced only in a

one-ounce weight with a $50 denomination. In FY 2007, the

American Buffalo Gold Bullion Coin sales decreased to 171

thousand ounces compared to 266.5 thousand ounces in FY

2006. The American Buffalo Gold Bullion net program 

revenue for FY 2007 was $1.7 million compared to $3.0 

million in net program revenue in FY 2006. 

American Buffalo Gold Proof Coins: FY 2007 also marked

the second year of the American Buffalo 24-Karat Gold

Proof Coin. This collectible product was sold in one-ounce

units and generated sales of 73.9 thousand units and $59.9

million in earned revenue in FY 2007 compared to 208.7

thousand units and $166.7 million in earned revenue in FY

2006. Net program revenues for FY 2007 were $5.6 million

compared to $15.9 million for FY 2006. 

Commemorative Coins: Commemorative coins revenue (less

surcharges paid to recipient organizations) increased to

$45.6 million in FY 2007 from $24.9 million in FY 2006.

Congress authorized the issuance of the Jamestown 400th

Anniversary silver dollar and $5 gold coin and the Little

Rock Central High School Desegregation 50th Anniversary

Commemorative Coins, which were released in January

2007 and May 2007, respectively. The Jamestown 400th

Anniversary Commemorative Coin Program generated $19.1

million in revenue and $5.0 million in surcharges for 

the designated beneficiary organizations. The Little Rock

Central High School Desegregation 50th Anniversary

Commemorative Coin Program generated $3.9 million in

revenue and $1.5 million in surcharges for the designated

recipient organization. 

• 20 •

American Buffalo Gold Bullion Cost and Net 

Program Revenue

167.7

117.5

115.8

164.7

3.0

1.7

-

50

100

150

200

FY 2007 FY 2006

Net Program Revenue

Gross Numismatic Cost

-

50

100

150

200

American Buffalo Gold Proof Net Program

Revenue

166.7

59.9

54.3

150.8

15.9

5.6

-

50

100

150

200

FY 2007 FY 2006

Net Program Revenue

Gross Numismatic Cost

-

50

100

150

200
ANNUAL REPORT

In 2006, Congress authorized the issuance of the San

Francisco Old Mint Commemorative Coin Program.

Because this program was signed into law late in the fiscal

year, coins were not shipped, and total revenues did not

accrue until FY 2007. Net program revenue for the San

Francisco Old Mint Commemorative Coin Program in FY

2007 was $3.4 million, and surcharges collected for the 

designated recipient totaled $4.7 million. Surcharges paid to

recipient organizations totaled $13.6 million in FY 2007.

Recurring Programs: Recurring programs include Proof

Sets, Silver Proof Sets, Uncirculated Sets, 50 State Quarters

Proof Sets, 50 State Quarters Silver Proof Sets, and other

miscellaneous products. Revenue from recurring programs

increased to $189.8 million in FY 2007 from $181.4 million

in FY 2006. Net program revenues decreased to $8.3 

million in FY 2007 compared with $35.1 million in FY

2006. The recurring net revenue ratio decreased to 4.4 

percent in FY 2007 from 19.3 percent in FY 2006. 

Numismatic Sales of Circulating Coinage: With the 

introduction of the 50 States Quarters Program, the Golden

Dollar and the 5-cent coin redesigns, there has been an

increase in collector demand for circulating quality coins

that have not yet been circulated. These coins are typically

sold by the United States Mint in bags and rolls. Sales in this

category represent the face value of the coins sold. All

production cost, whichever is higher, and any additional

expenses incurred in selling these products, are included in

the Numismatic Recurring Programs in the previous section.

Total numismatic earned revenue from the sale of circulating

coinage plus other financing sources increased to $36.1 

million in FY 2007 as compared with $24.4 million in FY

2006. As in the case of circulating coins sold to the FRB, the

portion of the other financing sources from the sale of

numismatic circulating coinage transferred to the Treasury

General Fund represents off-budget receipts.

• 21 •

2007

Recurring Coin Products Cost and Net Program 

Revenue

181.4

189.8

181.5

146.3

35.1

8.3

-

20

40

60

80

100

120

140

160

180

200

FY 2007 FY 2006

Net Program Revenue

Gross Numismatic Cost

-

20

40

60

80

100

120

140

160

180

Numismatic Sales of Circulating Coins

36.1

24.4

9.0 10.5

27.1

13.9

-

5

10

15

20

25

30

35

40

45

50

FY 2007 FY 2006

Earned Revenue Other Financing Sources

5

10

15

20

25

30

35

40

45

additional revenue above the face value, or above the
UNITED STATES MINT 

Numismatic Cost, Earned Revenue, and Net Program

Revenue: Earned revenue for numismatic sales to the public

(net of surcharges paid to recipient organizations) decreased

to $871.5 million FY 2007. This compares with earned 

revenue of $1,027.1 million for numismatic sales to the 

public in FY 2006. The total net program revenue on the

sale of numismatic products decreased to $53.3 million in FY

2007 compared with $85.5 million in FY 2006. 

The following charts show total numismatic revenue and net

program revenue for FY 2007 compared with FY 2006

results, and show costs and net program revenue by major

product lines.

• 22 •

Numismatic Cost, Earned Revenue, and Net

Program Revenue

1027.1

871.5

818.2

941.6

85.5

53.3

400

500

600

700

800

900

1,000

1,100

FY 2007 FY 2006

Net Program Revenue

Gross Numismatic Cost

400

500

600

700

800

900

NUMISMATIC NET PROGRAM REVENUE (in Millions)

FOR THE YEAR ENDED SEPTEMBER 30, 2007

American 

Eagle 

Bullion

American 

Eagle Proof, 

Uncirculated & 

20th 

Anniversary

American 

Buffalo Gold 

Bullion

American 

Buffalo Gold 

Proof & 

Uncirculated Commemoratives Recurring Total

Revenue (less surcharges & commissions) $238.6 $220.1 $117.5 $59.9 $45.6 $189.8 $871.5

Cost of Goods Sold 234.7 170.3 115.2 50.2 35.7 133.4 $739.5

Selling, General & Administrative 1.0 19.5 0.6 4.0 4.5 46.9 $76.5

Other Cost 0.1 0.7 0.0 0.1 0.1 1.2 $2.2

Net Program Revenue $2.8 $29.6 $1.7 $5.6 $5.3 $8.3 $53.3

Net Program Revenue Ratio 1.2% 13.4% 1.4% 9.3% 11.6% 4.4% 6.1%

NUMISMATIC NET PROGRAM REVENUE (in Millions)

FOR THE YEAR ENDED SEPTEMBER 30, 2006

American 

Eagle 

Bullion

American 

Eagle Proof, 

Uncirculated & 

20th 

Anniversary

American 

Buffalo Gold 

Bullion

American 

Buffalo Gold 

Proof Commemoratives Recurring Total

Revenue (less surcharges & commissions) $368.9 $117.5 $167.7 $166.7 $24.9 $181.4 $1,027.1

Cost of Goods Sold 358.7 83.8 164.2 136.9 14.6 100.4 $858.6

Selling, General & Administrative 0.9 15.7 0.5 13.5 5.4 44.8 $80.8

Other Cost 0.1 0.5 0.0 0.4 0.1 1.1 $2.2

Net Program Revenue $9.2 $17.5 $3.0 $15.9 $4.8 $35.1 $85.5

Net Program Revenue Ratio 2.5% 14.9% 1.8% 9.5% 19.3% 19.3% 8.3%
ANNUAL REPORT

PROTECTION OPERATIONS

The United States Mint Office of Protection maintains a professional police force with the tools and resources

needed to respond to the changing threats of today’s environment. The Office of Protection is committed to

recruiting and retaining the highest caliber law enforcement personnel and to maintaining a competitive 

compensation structure.

The Office of Protection secures approximately $184.5 billion in market value of the nation’s gold and silver

reserves and protects the United States Mint’s assets while safeguarding our employees against potential

threats at our facilities across the country. In FY 2007, the Protection Program had a net cost of $37.7 

million, a decrease from a net cost of $42.8 million in FY 2006. 

CAPITAL INVESTMENTS 

Each year, the United States Mint commits funds for capital projects to maintain, upgrade or acquire 

equipment, physical structures, physical security systems, and information technology systems. Funds 

obligated for capital projects totaled approximately $27.9 million in FY 2007. This included approximately

$23.3 million for manufacturing projects, $2.0 million for security improvement projects, and $2.6 million

for information technology projects. The United States Mint’s capital projects are focused on improving

processes, developing new coin design and production capabilities, and expanding information handling.

These investments are planned to reduce costs, shorten the overall time from product concept to production,

and achieve greater flexibility to respond to market demands.

TOTAL UNITED STATES MINT NET PROGRAM REVENUES AND 

OTHER FINANCING SOURCES

• 23 •

2007

Consolidated Net Program Revenue and Other 

Financing Sources

650.2

725.1 764.0

1,047.9

-

200

400

600

800

1,000

1,200

2007 2006 2005 2004

200

400

600

800

1,000

The net program revenues plus other financing sources increased to $1,047.9 million in FY 2007 from $725.1

million in FY 2006. 
UNITED STATES MINT 

TRANSFERS TO THE TREASURY GENERAL FUND

The PEF permits the United States Mint to

operate in a business-like manner, allowing the

United States Mint flexibility to adjust spending

to adapt to ever-changing economic and 

business conditions. As required by Public Law

104-52, the United States Mint transfers all

profits to the Treasury General Fund, retaining

only the amount required by the PEF to support

United States Mint operations and programs. 

In FY 2007, the United States Mint transferred

$825 million to the Treasury General Fund.

This total included $782 million in net 

operating results from the sale of circulating

coins either to the FRB or through numismatic channels (off-budget), and $43 million from profits on 

numismatic collectible and bullion sales (on-budget). In comparison, $750 million ($666 million off-budget

and $84 million on-budget) was transferred to the Treasury General Fund in FY 2006. 

The amounts transferred to Treasury are directly related to the sales of United States Mint products. The total

face value of circulating coins shipped to the Federal Reserve or sold through numismatic channels increased

from the previous year. In a stable cost environment, an increase in circulating shipments would normally

result in a larger source of funds available for transfer. 

SUPPLEMENTAL INFORMATION PER PUBLIC LAW 107-201

Public Law 107-201 (July 23, 2002) authorized the United States Mint to purchase silver on the open 

market to mint coins when the silver in the Strategic and Critical Materials Stockpile was depleted. The law

requires an annual reporting of the amount of silver purchased on the open market by fiscal year. The 

following represents purchases for FY 2007 and FY 2006:

QUANTITY (FTO) MARKET VALUE

FY 2007 15,400,340.3630 $202,677,630.61

FY 2006 17,036,321.0010 $178,226,186.41

• 24 •

Transfers to the Treasury General Fund

665

775 750

825

-

100

200

300

400

500

600

700

800

900

1,000

2007 2006 2005 2004

200

300

400

500

600

700

800
PERFORMANCE GOALS, OBJECTIVES AND RESULTS

One of the most effective means of determining how well an organization is performing is through the use of

performance measures. As mandated by the Government Performance & Results Act (GPRA) of 1993, 

agencies are to identify critical activities, devise pertinent performance measures, and report on these activities

to the President and Congress.

The United States Mint’s strategic plan focuses on improving efficiency, ensuring integrity, valuing our

employees, and operating at the utmost performance level expected of a federal agency. To assess our efforts,

the United States Mint identified key performance measures that cut across the entire organization. Tied to

these performance measures are high-level targets coupled with initiatives enabling us to reach our goals.

These measures are presented as bureau-wide strategic performance measures, which establish a single, 

critical set of measures we use to monitor and to manage our operations effectively. The following table 

identifies our performance measures, targets and year-end achievements.

BUDGET PERFORMANCE MEASURES

The following table shows the targets and results for performance measures presented as part of the FY 2007

Performance Budget.

ANNUAL REPORT

• 25 •

2007

FY 2007 RESULT FY 2007 TARGET FY2006 RESULT

Conversion cost per 1,000 coin 

equivalents $7.23 $7.27 $7.55

Cycle-time 61 days 75 days 72 days

Order fulfillment 98% 96% 95%

Protection cost per square foot $31.75 $32.99 $32.49

Total losses Not Available $10,000 $0

ANALYSIS OF BUDGET PERFORMANCE MEASURES

CONVERSION COST PER 1,000 COIN EQUIVALENTS

The United States Mint’s costs vary by product, and the

product mix has been variable over time. This makes it 

difficult to compare operating results from year to year. The

coin equivalent (CE) calculation converts the production

output to a common denominator based on the circulating

quarter. Production costs, excluding metal and fabrication,

are then divided by this standardized production level, thus

resulting in “conversion costs per 1,000 coin equivalents.”

This allows comparison of performance over time by 

negating the effects of changes in the product mix. FY 2007

Conversion costs were $7.23 per 1000 CEs, below the target

Conversion cost per 1,000 coin equivalents

7.23 7.55 7.42

7.93

$5

$6

$7

$8

$9

$10

FY 2007 FY 2006 FY 2005 FY 2004
of $7.27. This is an improvement of four percent from the FY 2006 result of $7.55. The FY 2007 target

was based on a production forecast of 26,669 million CEs. However, during FY 2007, production was

23,964 million CEs (a ten percent reduction from the forecast). Coin equivalent production volumes were

lower than expected due to reduced demand for bullion products and for the new Presidential $1 coins. While

CE production was lower than expected, the target was met as conversion costs for that level of production

were reduced by a slightly larger percent due to improved efficiencies and increased productivity through the

use of technology and automation.

In order to continue improving results, several projects are in progress or in the planning stages. These 

projects would expand the use of digital design and engraving to reduce some process costs, and automate

material movement in the production of dollar coins.

CYCLE-TIME

The cycle time measure assesses the time it takes material to

flow through the United States Mint’s processes from raw

material to order fulfillment. The United States Mint’s objective

is to minimize the amount of time required to process raw

materials into finished goods by eliminating non-value added

steps from the processes and reducing the amount of raw

material in inventory. As of September 2007, cycle-time was

61 days, a decrease of 11 days as of September 2006. The

targeted cycle-time was 75 days. This improvement is a

result of lower raw materials and finished goods inventories

along with a higher average daily production rate. 

The United States Mint will continue to promote "Lean

Manufacturing" and automation projects to reduce raw

material and work-in-progress inventories to shorten cycle

time. A penny blank storage and retrieval system is planned

similar to the coil handling system already in place.

ORDER FULFILLMENT

Order fulfillment is a measure that tracks the overall order 

fulfillment for the circulating coins shipped to the Federal

Reserve Bank and the numismatic coins sold to the public.

Both components are then weighted by their respective share of

the total revenues and other financing sources. The United

States Mint order fulfillment performance at 98% for FY 2007

surpassed the target of 96%. This improves upon the FY 2006

result of 95% by 3%. This measure indexes the order 

fulfillment rates of two business lines, circulating and 

numismatic, by their respective revenues. This performance

means that 98% of revenues are from products delivered ontime.

The United States Mint will continue to foster a close relationship with the Federal Reserve Bank to ensure that

the order fulfillment rate for circulating coins remains high. Customer service to numismatic customers remains

a priority, and the United States Mint personnel will continue to closely monitor numismatic order fulfillment.

UNITED STATES MINT 

• 26 •

Cycle-time

85

69 72

61

-

20

40

60

80

100

FY 2007 FY 2006 FY 2005 FY 2004

-

20

40

60

80

Order fulfillment 98% 95% 94%

N/A

0%

20%

40%

60%

80%

100%

FY 2007 FY 2006 FY 2005 FY 2004
PROTECTION COST PER SQUARE FOOT

Protection cost per square foot consists of the Office of

Protection’s total operating cost divided by the area of

usable space. Usable space is defined as 90% of the total

square footage. The Office of Protection uses the cost per

square foot to provide a measurement of efficiency over

time. The square footage of usable space at the United

States Mint is a stable figure and will only change 

significantly with major events such as the addition or

removal of a facility. Protection cost per square foot is

$31.75 for FY 2007, lower than the target of $32.99 by four

percent. This result is an improvement of two percent from

the FY 2006 result of $32.49. The United States Mint Office

of Protection made efforts to curtail some travel expenses,

and actual expenses related to a planned buyout ended up

lower than expected. 

The United States Mint Office of Protection will continue efforts to contain costs, while maintaining proper

operations to fulfill protection responsibilities. Projects to automate entry and exit at facilities are expected

to reduce the need for staffing costs associated with these functions.

TOTAL LOSSES

The United States Mint performs its protection function by

minimizing vulnerability to theft and preventing unauthorized

access to critical assets. Total Losses measures the dollar

amount of losses incurred because of the realization of threats

against the United States Mint. Total losses measures losses

within three categories representing cases that have been

investigated and closed:

1. Financial Losses: intentional monetary losses, thefts 

or fraud from metal reserves, produced coinage, 

retail sales and other administrative losses.

2. Cost of Intrusions: the cost of repair or recovery from

an intentional intrusion into United States Mint 

systems and facilities either electronically or physically.

3. Productivity Losses: the cost of intentional damage or

destruction to production capabilities, including 

related costs for continuity of operations.

The United States Mint FY 2007 result is not available at this time. At the end of FY 2007, the United States

Mint initiated a review to examine the policies and procedures that serve as the basis for this measure. The

FY 2007 result for the Total Losses measure is pending the outcome of this review. The review is expected

to be completed during FY 2008 and the results for FY 2007 will be published in subsequent budget reports

and in the FY 2008 annual report.

ANNUAL REPORT

• 27 •

2007

Protection cost per square foot

$31.75 $32.49 $32.43 $32.51

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

FY 2007 FY 2006 FY 2005 FY 2004

Total losses

$1,135

$0

$3,109

N/A

$0

$1,000

$2,000

$3,000

$4,000

FY 2007 FY 2006 FY 2005 FY 2004
UNITED STATES MINT 

CURRENT AND FUTURE CHALLENGES

The United States Mint is being challenged by a wide range of changes in the world around us — changes in

how people purchase goods and services, rapidly rising metal costs, and whether people collect coins as a

hobby or investment. While the United States Mint is not in a position to control these changes in the 

outside world, we are in a position to control how we prepare for them and how we respond to them. We

have chosen to take a proactive approach in addressing them — working closely with our stakeholders, 

customers and vendors to safeguard, to the greatest extent practicable, our ability to continue to effectively

fulfill the United States Mint’s mission to the American public.

KEY CHALLENGES

PROMOTING ROBUST CIRCULATION OF $1 COINS

As of September 30, 2007, 673 million Presidential $1 Coins have been ordered by the Federal Reserve Bank.

While the total for the first-year orders of the Presidential $1 Coins could reach over 900 million, the coins

have not yet entered into general circulation and continue to be seen as a collectible. The United States Mint

is currently finalizing plans to educate more vendors, transit agencies, retailers and citizens on the utility of

$1 coins to promote general circulation. In addition, we need to continue efforts to enable the most efficient

and effective distribution chain from the United States Mint and the Federal Reserve Bank into the hands of

consumers.

RISING PRICES OF METAL LEADING TO HIGHER PRODUCTION COSTS

Steady and dramatic increases in the prices of zinc, copper, and nickel have raised the cost of producing 

circulating coinage. This continues to cause the one-cent and 5-cent coins to cost more than their face 

values on a per-unit basis.

THE MOST POPULAR NUMISMATIC COIN PROGRAM IS COMING TO AN END

In recent years, there has been an increased demand for numismatic products — due in large part to the 

overwhelming popularity of the 50 State Quarters products. However, this numismatic product line will

cease when the 50 State Quarters Program ends in December 2008. 

• 28 •
ANNUAL REPORT

ANALYSIS OF SYSTEMS, CONTROLS AND LEGAL COMPLIANCE

INTERNAL CONTROLS PROGRAM

MANAGEMENT ASSURANCES

The United States Mint’s management team is responsible for establishing and maintaining effective internal

controls, which includes safeguarding of assets and compliance with applicable laws and regulations.

Therefore, the United States Mint has made a conscientious effort during FY 2007 to meet the internal 

control requirements of the Federal Managers’ Financial Integrity Act (FMFIA), the Federal Financial

Management Improvement Act (FFMIA), Office of Management and Budget (OMB) Circular A-123, and the

Government Performance and Results Act (GPRA) of 1993.

The systems of management controls for the United States Mint are designed to ensure that:

a) Programs achieve their intended results;

b) Resources are used consistent with overall mission;

c) Programs and resources are free from waste, fraud, and mismanagement;

d) Laws and regulations are followed;

e) Controls are sufficient to minimize any improper or erroneous payments;

f) Performance information is reliable;

g) Systems security is in substantial compliance with all relevant requirements;

h) Continuity of operations planning in critical areas is sufficient to reduce risk to reasonable levels; and

i) Financial management systems are in compliance with Federal financial systems standards.

The United States Mint has assessed its internal controls and, for all its responsibilities, we hereby provide a

qualified statement of assurance that the above listed management control objectives, taken as a whole, were

achieved with the exception of one material weakness. Details of the exception are provided in the next 

section. Specifically, this assurance is provided relative to Sections 2 and 4 of FMFIA. We further assure that

our financial management systems are in substantial compliance with the requirements imposed by the

Federal Financial Management Improvement Act (FFMIA). These assurances are as of September 30, 2007.

The United States Mint's management is responsible for establishing and maintaining effective internal 

control over financial reporting, which includes safeguarding of assets and compliance with applicable laws

and regulations. The United States Mint conducted an assessment of the effectiveness of the United States

Mint's internal control over financial reporting for the period ending June 30, 2007. This assessment was

conducted in accordance with OMB Circular A-123, “Management's Responsibility for Internal Control.”

The FY 2007 assessment was conducted by obtaining and documenting an understanding of the policies,

processes and procedures in effect, determining the significant control mechanisms and performing detailed

tests of transactions to ascertain the effectiveness of the identified controls. Each control tested was 

considered in light of the associated and/or mitigating controls that were in effect. The overall result was

considered and conclusions obtained as to the overall effectiveness of the controls in place. Based on the

results of this evaluation, the United States Mint has determined that a material weakness has resulted as of

June 30, 2007, for FY 2007.

• 29 •

2007
UNITED STATES MINT 

MATERIAL WEAKNESS

The United States Mint assessment team determined that the material weakness had a root cause centering

around changes to the organization and processes resulting from the conversion of its automated financial

system from an in-house managed system to a new system under an arrangement with a third party service

provider. This significant change in systems has required the United States Mint to redesign and implement

new and/or revised controls and reporting processes that focused on two primary areas: financial reporting

and inventory management. While the majority of the reporting aspects were resolved by fiscal year end, the

internal control over financial operations was weakened for a significant part of the year. Internal control

over inventory management was weakened during the fiscal year while new procedures were developed and

personnel trained in their proper application. 

The United States Mint is committed to maintaining effective systems of internal control; therefore, 

subsequent to the determination that a material weakness existed, the United States Mint took aggressive

steps to implement corrective actions to resolve the material weakness. The United States Mint has made 

significant progress toward making the necessary changes and has developed a corrective action plan to

address enhancements needed to resolve the noted weakness. As a result of these efforts, the United States

Mint has implemented corrective actions for all except three specific components as of September 30, 2007.

It is management’s position that the remaining issues will be resolved within a reasonable timeframe and a

vigilant oversight will ensure a proper system of internal controls will be in operation in the near future.

LEGAL COMPLIANCE

The United States Mint was found to be in full compliance with FFMIA at the transaction level.

• 30 •
ANNUAL REPORT

The principal financial statements have been prepared to report the financial position and results of 

operations of the United States Mint, pursuant to the requirements of 31 U.S.C. § 3515(b). The statements

have been prepared from the books and records of the United States Mint in accordance with generally

accepted accounting principles for Federal entities and the formats prescribed by OMB. The statements are

in addition to the financial reports used to monitor and control budgetary resources which are prepared from

the same books and records. The statements should be read with the realization that they are for a 

component of the United States Government.

• 31 •

2007

LIMITATIONS OF THE FINANCIAL STATEMENTS
26 

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

KPMG LLP. KPMG LLP, a U.S. limited liability partnership, is 

a member of KPMG International, a Swiss cooperative. 

Independent Auditors’ Report 

Inspector General 

United States Department of the Treasury 

Director 

United States Mint: 

We have audited the accompanying balance sheets of the United States Mint as of September 30, 

2007 and 2006, and the related statements of net cost, changes in net position, and combined 

statements of budgetary resources (hereinafter referred to as “financial statements”) for the years 

then ended. These financial statements are the responsibility of the United States Mint’s 

management. Our responsibility is to express an opinion on these financial statements based on 

our audits. 

We conducted our audits in accordance with auditing standards generally accepted in the United 

States of America; the standards applicable to financial audits contained in Government Auditing 

Standards, issued by the Comptroller General of the United States; and Office of Management 

and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements. 

Those standards and OMB Bulletin No. 07-04 require that we plan and perform the audits to 

obtain reasonable assurance about whether the 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 the United States Mint’s internal control 

over financial reporting. Accordingly, we express no such opinion. An audit also includes 

examining, on a test basis, evidence supporting the amounts and disclosures in the financial 

statements, assessing the accounting principles used and significant estimates made by 

management, as well as evaluating the overall financial statement presentation. We believe that 

our audits provide a reasonable basis for our opinion. 

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

the financial position of the United States Mint as of September 30, 2007 and 2006, and its net 

costs, changes in net position, and budgetary resources for the years then ended in conformity 

with U.S. generally accepted accounting principles. 

As disclosed in Note 1 to the financial statements, the United States Mint changed its method of 

reporting the reconciliation of budgetary resources obligated to the net cost of operations in fiscal 

year 2007. 

• 32 •
The information in Management’s Discussion and Analysis and Required Supplementary 

Information is not a required part of the financial statements, but is supplementary information 

required by U.S. generally accepted accounting principles and OMB Circular No. A-136, 

Financial Reporting Requirements. We have applied certain limited procedures, which consisted 

principally of inquiries of management regarding the methods of measurement and presentation 

of this information. However, we did not audit this information and, accordingly, we express no 

opinion on it.

In accordance with Government Auditing Standards, we have also issued our reports dated 

December 4, 2007, on our consideration of the United States Mint’s internal control over 

financial reporting and our tests of its compliance with certain provisions of laws, regulations, 

contracts, and other matters. The purpose of those reports is to describe the scope of our testing 

of internal control over financial reporting and compliance and the results of that testing, and not 

to provide an opinion on the internal control over financial reporting or on compliance. Those 

reports are an integral part of an audit performed in accordance with Government Auditing 

Standards and should be read in conjunction with this report in assessing the results of our audits.

December 4, 2007 

• 33 •
UNITED STATES MINT 

• 34 •

2007 2006

ASSETS

Intragovernmental:

Fund Balance with Treasury (Note 3) $255,731 $225,917

Accounts Receivable, Net (Note 4) 5,870 0

Advances and Prepayments (Note 5) 4,452 3,948

Total Intragovernmental Assets 266,053 229,865

Custodial Gold and Silver Reserves (Note 6) 10,493,740 10,493,740

Accounts Receivable, Net (Note 4) 80,279 28,120

Inventory and Related Property (Notes 7 & 20) 418,072 253,329

Supplies 14,635 15,318

Property, Plant and Equipment, Net (Note 8) 218,014 233,394

Advances and Prepayments (Note 5) 1,805 1,859

Total Non-Intragovernmental Assets 11,226,545 11,025,760

Total Assets (Notes 2 and 14) $11,492,598 $11,255,625

Heritage Assets (Note 9)

LIABILITIES

Intragovernmental:

Accounts Payable $509 $1,183

Accrued Workers' Compensation and Benefits 7,117 6,541

Unearned Revenues 156 0

Total Intragovernmental Liabilities 7,782 7,724

Custodial Liability to Treasury (Note 6) 10,493,740 10,493,740

Accounts Payable 60,096 52,436

Surcharges Payable (Note 3) 6,526 8,361

Accrued Payroll and Benefits 15,353 14,923

Other Actuarial Liabilities 29,704 31,482

Unearned Revenues 1,891 3,362

Total Non-Intragovernmental Liabilities 10,607,310 10,604,304

Total Liabilities (Notes 10 and 14) $10,615,092 $10,612,028

Commitments and Contingencies (Notes 12 & 13)

NET POSITION

Cumulative Results of Operations - Earmarked Funds (Note 14) 877,506 643,597

Total Liabilities and Net Position $11,492,598 $11,255,625

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

As of September 30,

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

BALANCE SHEETS

(In Thousands)
ANNUAL REPORT

• 35 •

2007

The accompanying notes are an integral part of these financial statements
UNITED STATES MINT 

• 36 •

2007 2006

CUMULATIVE RESULTS OF OPERATIONS

NET POSITION, Beginning of Year - Earmarked Funds (Note 14) $643,597 $657,524

FINANCING SOURCES:

Transfers to the Treasury General Fund On-Budge (43,000) (84,000)

Transfers to the Treasury General Fund Off-Budget (782,000) (666,000)

Other Financing Sources (Seigniorage) (Note 16) 1,032,284 682,480

Imputed Financing Sources (Note 11) 11,020 10,950

Total Financing Sources 218,304 (56,570)

Net Revenue from Operations 15,605 42,643

Net Position, End of Year - Earmarked Funds (Note 14) $877,506 $643,597

For The Years Ended September 30,

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

STATEMENTS OF CHANGES IN NET POSITION

(In Thousands)

The accompanying notes are an integral part of these financial statements
ANNUAL REPORT

• 37 •

2007 2006

Budgetary Resources

Unobligated balance, brought forward, October 1 $40,549 $112,870

Recoveries of prior-year unpaid obligations 15,389 -

Budget authority

 Spending authority from offsetting collections

 Earned

Collected 1,863,258 1,650,475

Change in receivable from federal sources 5,870 (58)

 Change in unfilled customer orders

Advance received 2,047 -

Without advance from federal sources 30 -

Anticipated for Rest of Year, Without Advance - -

Subtotal 1,871,205 1,650,417

Permanently not available (43,000) (84,000)

Total Budgetary Resources $1,884,143 $1,679,287

Status of Budgetary Resources

Obligations incurred 

Reimbursable (Note 17) $1,831,055 $1,638,738

Unobligated balances

Apportioned 53,088 40,549

Total Status of Budgetary Resources $1,884,143 $1,679,287

Change in Obligated Balances

Obligated balance, net

Unpaid obligations, brought forward, October 1 $179,561 $160,848

Less: Uncollected customer payments from federal

 sources, brought forward, October 1 - (58)

Total unpaid obligated balance, net 179,561 160,790

Obligations incurred, net (Note 17) 1,831,055 1,638,738

Gross outlays 1,786,683 1,619,945

Recoveries of prior-year unpaid obligations, actual 15,389

Change in uncollected customer payments from 

 federal sources 5,900 (58)

Obligated balance, net, end of the period

Unpaid obligations 208,543 179,561

Uncollected customer payments from federal sources (5,900) -

Total unpaid obligated balance, net, end of period 202,643 179,561

Net Outlays

Net outlays

Gross outlays 1,786,683 1,619,945

Collections (1,865,305) (1,650,475)

Total Outlays ($78,622) ($30,530)

For The Years Ended September 30,

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

STATEMENTS OF BUDGETARY RESOURCES

(In Thousands)

2007

The accompanying notes are an integral part of these financial statements
UNITED STATES MINT 

(Dollars are in thousands except Fine Troy Ounce information)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

Established in 1792, the United States Mint is a bureau of the Department of the Treasury (Treasury). The

mission of the United States Mint is to manufacture coins for general circulation, to manufacture and sell

numismatic products for the benefit of the Federal Government and various recipient organizations, and to

protect certain federal assets in its custody. Numismatic products include medals; proof coins; uncirculated

coins; platinum, gold, and silver bullion coins; and commemorative coins. Custodial assets consist of the

United States’ gold and silver metal reserves. These custodial reserves are often referred to as “deep storage”

and “working stock,” and are reported on the Balance Sheet.

Manufacture of numismatic products is financed principally through sales to the public. Manufacture of 

circulating coinage is financed through sales of coins at face value to the Federal Reserve System. Activities

related to protection of federal custodial assets are funded by revenues and other financing sources received

by the United States Mint Public Enterprise Fund (PEF).

Pursuant to Public Law 104-52, Treasury Postal Service and General Government Appropriation Bill for FY

1996, as codified at 31 U.S.C § 5136, the PEF was established to account for all revenues and expenses related

to production and sale of numismatic products and circulating coinage and protection activities. Expenses

accounted for in this fund include the cost of metals and fabrication and transportation of metals used in 

circulating and numismatic coin production and costs of transporting circulating coinage between the United

States Mint production facilities and Federal Reserve Banks (FRB). Metals used in circulating and numismatic

coin production include nickel, copper, zinc, manganese, gold, silver, and platinum, as well as smaller quantities

of other base metals. Other costs/expenses accounted for in this fund include costs related to research and

development and purchases of equipment, as well as capital improvements and protection costs. P.L. 104-52

states that any amount in the PEF that is determined to be in excess of the amount required by the PEF shall

be transferred to the Treasury General Fund.

Treasury’s Bullion Fund (Bullion Fund) is used to account for United States gold and silver reserves. A separate

Schedule of Custodial Deep Storage Gold and Silver Reserves has been prepared for the deep storage portion

of the Treasury gold and silver reserves for which the United States Mint acts as custodian.

BASIS OF ACCOUNTING AND PRESENTATION

The accompanying Financial Statements were prepared in conformity with the reporting format promulgated

by the Office of Management and Budget (OMB) Circular A-136, Financial Reporting Requirements and in

accordance with accounting standards issued by the Federal Accounting Standards Advisory Board (FASAB).

The United States Mint’s financial statements have been prepared to report the financial position, net cost of

operations, changes in net position, and budgetary resources, as required by P.L. 104-52. For the fiscal year

ended September 30, 2007, OMB changed the required reconciliation of net costs to budgetary resources

from the separately presented Statement of Financing to a note disclosure (see note 21).

• 38 •

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED SEPTEMBER 30, 2007
ANNUAL REPORT

Management uses estimates and assumptions in preparing financial statements. Those estimates and 

assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and 

liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Accounts subject to estimates include depreciation, imputed costs, payroll and benefits, accrued worker’s

compensation, allowance for uncollectible accounts receivable, and unemployment benefits.

The accompanying financial statements have been prepared on the accrual basis of accounting. Under the

accrual method, revenues and other financing sources are recognized when earned and expenses are 

recognized when a liability is incurred, without regard to receipt or payment of cash. All intra-United States

Mint transactions and balances have been eliminated.

EARNED REVENUES AND OTHER FINANCING SOURCE (SEIGNIORAGE)

Circulating Sales: P.L. 104-52, establishing the PEF, provides for the sale of circulating coinage at face value

to the Federal Reserve Banks. Revenue from the sale of circulating coins is recognized when the product is

shipped to the FRB.

Revenue from the sale of circulating coins to the FRB and numismatic sales of circulating coins is limited to

the recovery of the cost of manufacturing those coins. Coins are sold at face value. The difference between

the face value of circulating coins sold and the total cost of producing those coins is considered an “other

financing source” in accordance with FASAB guidelines.

Other Financing Source (Seigniorage) is the face value of newly minted coins less the cost of production

(which includes the cost of the metal, manufacturing, and transportation). Seigniorage is the profit from

coining money. Seigniorage adds to the government’s cash balance, but unlike the payment of taxes or other

receipts, it does not involve a transfer of financial assets from the public. Instead, it arises from the exercise

of the Government’s sovereign power to create money and the public’s desire to hold financial assets in the

form of coins. Therefore, the President’s Budget excludes seigniorage from receipts and treats it as a means

of financing. The President’s Budget also treats profits resulting from the sale of gold as a means of 

financing because the value of gold is determined by its value as a monetary asset rather than as a commodity.

Other financing source (seigniorage) is recognized when coins are shipped to the FRB in return for deposits

to the United States Mint’s PEF.

Numismatic Sales: Revenue from numismatic sales to the public is recognized when products are shipped to

customers. Prices for numismatic products are based on the product cost plus a reasonable net program 

revenue. Bullion products are priced based on the market price of the precious metals plus a premium to

cover manufacturing costs.

Rental Revenue: The United States Mint receives rental revenue from floor space that is subleased in two

United States Mint facilities located in Washington, D.C. The space is subleased to other federal government

entities. For the purpose of presentation, rental revenue is combined with numismatic sales on the statement

of net cost. 

Protection Revenue: This is derived from revenue received for protection services provided to other federal

agencies.

• 39 •

2007
UNITED STATES MINT 

FUND BALANCE WITH TREASURY

All cash is maintained at the Treasury. Fund Balance with Treasury is the aggregate amount of the United

States Mint’s cash accounts with the U.S. Government’s central accounts from which the United States Mint

is authorized to make expenditures and pay liabilities. It is an asset because it represents the United States

Mint’s claim to the U.S. Government resources.

ACCOUNTS RECEIVABLE

Accounts receivable are amounts due to the United States Mint from the public and other federal agencies.

An allowance for uncollectible customer accounts receivable from the public is established for all accounts

that are more than 180 days past due. However, the United States Mint will continue collection action on

those accounts that are more than 180 days past due as specified by the Debt Collection Improvement Act

of 1996.

INVENTORIES AND RELATED PROPERTY

Inventories of circulating and numismatic coinage that do not contain either gold or silver are valued at the

lower of cost or market. Costs of the metal and fabrication components of the inventories are determined

using a weighted average inventory methodology. Conversion costs (i.e., the cost to convert the fabricated

blank into a finished coin) are valued using a standard cost methodology.

Numismatic coinage containing Treasury-owned gold and silver does not include the value of the Treasuryowned gold or silver because the metals are non-entity assets. The costs of those metals appear as “Custodial

Gold and Silver Reserves” on the Balance Sheet and are valued at the statutory rates of $42.2222 per fine

troy ounce (FTO) of gold and $1.292929292 per FTO of silver.

United States Mint-owned platinum, gold, and silver are valued at the lower of cost or market using a weighted

average inventory methodology.

CUSTODIAL GOLD AND SILVER RESERVES

Custodial gold and silver reserves consist of both “deep storage” and “working stock” gold and silver.

Deep Storage is defined as that portion of the U.S. Government-owned gold and silver Bullion Reserve which

the United States Mint secures in sealed vaults. Deep storage gold comprises the vast majority of the Bullion

Reserve and consists primarily of gold bars. Deep storage silver is also primarily in bar form.

Working Stock is defined as that portion of the U.S. Government-owned gold and silver Bullion Reserve

which the United States Mint can use as the raw material for minting Congressionally authorized coins.

Working stock gold comprises only about one percent of the Gold Bullion Reserve and consists of bars,

blanks, unsold coins, and condemned coins. Similarly, working stock silver consists of bars, blanks, unsold

coins, or condemned coins.

Treasury allows the United States Mint to use some of its gold and silver as working stock. Generally, the

United States Mint will replace the working stock when used in production with purchases of gold and 

silver on the open market. In those cases where the gold or silver is not replaced, the United States Mint

reimburses Treasury the market value of the depleted gold or silver. 

• 40 •
ANNUAL REPORT

SUPPLIES

Supplies are items that are not considered inventory and are not a part of the finished product. These items

include plant engineering and maintenance supplies. Supplies are accounted for using the consumption

method, in which supplies are recognized as assets upon acquisition and expensed as they are consumed.

ADVANCES AND PREPAYMENTS

Payments in advance of the receipt of goods and services are recorded as advances and prepaid expenses at

the time of prepayment, and are expensed when related goods and services are received.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are valued at cost less accumulated depreciation. The United States Mint’s

threshold for capitalizing new property, plant and equipment is $25,000 for single purchases and $500,000

for bulk purchases. Depreciation is computed on a straight-line basis over the estimated useful lives of the

related assets as follows:

Computer Equipment 3 to 5 years

ADP Software 2 to 10 years

Machinery and Equipment 7 to 20 years

Structures, Facilities and Leasehold Improvements 10 to 30 years

Major alterations and renovations are capitalized over the shorter of a 20-year period or the remaining 

useful life of the asset and depreciated using the straight-line method, while maintenance and repair costs are

charged to expense as incurred. There are no restrictions on the use or convertibility of general property,

plant and equipment.

HERITAGE ASSETS

Heritage assets are items that are unique because of their historical, cultural, educational, or artistic importance.

These items are collection type assets that are maintained for exhibition and are preserved indefinitely.

LIABILITIES

Liabilities represent actual and estimated amounts likely to be paid as a result of transactions or events that

have already occurred. All liabilities covered by budgetary resources can be paid from revenues received from

the United States Mint PEF.

SURCHARGES

Legislation authorizing commemorative programs often requires that the PEF remit a portion of the sales 

proceeds to recipient organizations. These amounts are defined as surcharges. A surcharges payable account

is established for surcharges received but not yet paid to the designated recipient organization.

Pursuant to P.L. 104-208, Omnibus Consolidated Appropriations for Fiscal Year 1997 (Act), recipient 

organizations cannot receive surcharge payments unless all of the United States Mint’s operating costs of the

coin program are fully recovered. The United States Mint may make interim surcharge payments during a

commemorative program if the recipient organization meets the eligibility criteria in the Act, if the profitability

of the program is determinable, and if the United States Mint is assured it is not at risk of a loss. P.L. 108-

15, American 5-Cent Coin Design Continuity Act of 2003, contains a provision that recipient organizations

have two years from the end of the program sales to meet the requirements of P.L. 104-208. If the 

requirements are not met within two years, the surcharges collected are to be deposited in the Treasury as

• 41 •

2007
UNITED STATES MINT 

miscellaneous receipts. Additionally, P.L. 108-15 changed the fund raising requirement for recipient 

organizations from an amount equal to the maximum surcharges possible based on the maximum mintage

to an amount equal to the surcharges actually collected based on sales.

EARMARKED FUNDS

Pursuant to P.L. 104-52, the United States Mint Public Enterprise Fund (PEF) was established as the sole

funding source for United States Mint activities. The PEF meets the requirements of an earmarked fund as

defined in SFFAS 27, Identifying and Reporting Earmarked Funds.

UNEARNED REVENUES

These are amounts received from customers for which the numismatic products have not been shipped. In

the case of intragovernmental entities, unearned revenue is rental payments received in advance.

RETURN POLICY

If for any reason a customer is dissatisfied, the entire product must be returned within 30 days of receiving

the order to receive a refund or replacement. Shipping charges are not refunded. Further, the United States

Mint will not accept partial returns or issue partial refunds. Historically, the United States Mint receives very

few returns, which are immaterial. Therefore, no reserve for returns is considered necessary.

SHIPPING AND HANDLING

The United States Mint reports shipping and handling cost as Cost of Goods Sold and not as part of Selling

or General and Administrative expenses. General postage costs for handling administrative functions are

reported as part of the United States Mint’s General and Administrative Expenses.

ANNUAL, SICK AND OTHER LEAVE

Annual leave is accrued when earned and reduced as leave is taken. The balance in the accrued leave account

is calculated using current pay rates. Sick leave and other types of non-vested leave are charged to operating

costs as they are used.

ACCRUED WORKERS COMPENSATION AND OTHER ACTUARIAL LIABILITIES

The Federal Employees' Compensation Act (FECA) provides income and medical cost protection to cover

federal civilian employees injured on the job, employees who have incurred a work-related injury or 

occupational disease, and to pay beneficiaries of employees whose deaths are attributable to job-related

injuries or occupational disease. The FECA program is administered by the United States Department of

Labor (DOL), which pays valid claims and subsequently seeks reimbursement from the United States Mint

for these paid claims.

The FECA liability is based on two components. The first component is based on actual claims paid by DOL

but not yet reimbursed by the United States Mint. There is generally a two-to-three-year time period between

payment by DOL and reimbursement to DOL by the United States Mint. The second component is the 

actuarial liability, which estimates the liability for future payments as a result of past events. The actuarial

liability includes the expected liability for death, disability, medical, and miscellaneous cost for approved

compensation cases.

PROTECTION COSTS

Virtually all of the Treasury’s gold and majority of the silver reserves are in the custody of the United States

Mint which is responsible for safeguarding the reserves. These costs are borne by the United States Mint, but

• 42 •
ANNUAL REPORT

are not directly related to the circulating or numismatic coining operations of the United States Mint.

Organizationally, the Protection Strategic Business Unit, which is responsible for safeguarding the reserves, is

a separate line of business from coining operations.

OTHER COST AND EXPENSES (MUTILATED AND UNCURRENT)

Other costs and expenses consist primarily of returns of mutilated or uncurrent coins to the United States

Mint. Coins that are chipped, fused, and/or not machine-countable are considered mutilated. The United

States Mint reimburses the entity that sent in the mutilated coins at the face value of these coins if the coins

are individually identifiable. If the coins have melted (as in a fire), the United States Mint reimburses the 

entity an amount based on the metal content of the melted mass. Uncurrent coins are worn, but machinecountable, and their genuineness and denomination are still recognizable. Uncurrent coins are replaced with

new coins of the same denomination by the FRB. All mutilated or uncurrent coins received by the United

States Mint are shipped to a fabricator to be recycled in the manufacture of coinage strip.

TAX EXEMPT STATUS

As an agency of the Federal Government, the United States Mint is exempt from all income taxes imposed

by any governing body, whether it is a federal, state, commonwealth, local, or foreign government.

CONCENTRATIONS

The United States Mint purchases the coil and blanks used in the production of its circulating products from

three vendors at competitive market prices.

RECLASSIFICATIONS

Certain fiscal year 2006 amounts have been reclassified to conform to current year presentation.

TRANSFERS TO THE TREASURY GENERAL FUND

The United States Mint transfers to the Treasury General Fund amounts in the PEF determined to be in excess

of the amounts required for United States Mint operations and programs. These amounts are generated from

the other financing source (seigniorage) derived from the sale of circulating coins and from net revenues 

generated from the sale of numismatic products.

Excess amounts generated from other financing source (seigniorage) are off-budget and deposited in the

Treasury General Fund. Off-budget means that these funds cannot be used to reduce the annual budget

deficit. Instead they are used as a financing source (i.e., they reduce the amount of cash that Treasury has to

borrow to pay interest on the national debt).

Excess amounts from revenues generated from the sale of numismatic products less protection costs are onbudget and deposited in the Treasury General Fund. Unlike seigniorage, the numismatic transfer is available

as current operating revenue or can be used to reduce the annual budget deficit.

BUDGETARY RESOURCES

The United States Mint receives all of its financing from the public and receives an apportionment from the

OMB. This apportionment is considered a budgetary authority. The United States Mint’s budgetary

resources consist of unobligated balances, transfers, and spending authority from offsetting collections, which

is net of amounts that are permanently not available. “Permanently not available” funds are numismatic

transfers to the General Fund.

• 43 •

2007
UNITED STATES MINT 

NOTE 2 NON-ENTITY ASSETS

Components of Non-entity Assets at September 30 are as follows:

Entity assets are assets that the reporting entity has authority to use in its operations. The United States Mint

management has legal authority to use entity assets to meet entity obligations. However, all assets in the 

possession of the United States Mint are not entity assets. Treasury allows the United States Mint to use some

of its gold and silver as working stock in the production of coins. The United States Mint must replace the

working stock or pay the Treasury General Fund for the metal used. Thus, Treasury deep storage and 

working stock gold and silver are all considered non-entity assets.

NOTE 3 FUND BALANCE WITH TREASURY

The United States Mint does not receive appropriated budget authority. The fund balance with Treasury is

entirely available for use to support United States Mint operations. At September 30, 2007 and 2006, the

revolving fund balance included $6.5 million and $8.4 million, respectively, in restricted amounts for 

possible payment of surcharges to recipient organizations.

Fund Balance with Treasury at September 30 consists of:

• 44 •

Custodial Gold Reserves (Deep Storage)

Custodial Silver Reserves (Deep Storage)

Custodial Gold Reserves (Working Stock)

Custodial Silver Reserves (Working Stock)

Total Non-entity Assets

Total Entity Assets

Total Assets

2007 2006

Revolving Fund $255,731 $225,917

Total Fund Balance with Treasury $255,731 $225,917

Status of Fund Balance with Treasury

 Unobligated Balance $53,088 $40,549

 Obligated Balance, Not Yet Disbursed 202,643 185,368

Total $255,731 $225,917
ANNUAL REPORT

NOTE 4 ACCOUNTS RECEIVABLE, NET

Components of accounts receivable are as follows:

At September 30, 2007, there were approximately $5.9 million in intragovernmental accounts receivable,

compared to none at September 30, 2006. This represents amounts due to the United States Mint relative to

a joint numismatic product with another agency. Receivables with the public at September 30, 2007 

primarily consist of $77.1 million in accounts receivable from metal scrap and webbing sold to fabricators.

This compares to $21 million at September 30, 2006. The remainder of the accounts receivable represents

outstanding balances on numismatic orders. The allowance for doubtful accounts is the balance of the

accounts receivable with the public that is past due by 180 days or more. Collection action continues on

these accounts, but an allowance is recorded.

NOTE 5 ADVANCES AND PREPAYMENTS

The components of advances and prepayments at September 30 are as follows:

Intragovernmental advances and prepayments at September 30, 2007 and 2006, include $2.5 million and

$1.9 million, respectively, that the United States Mint paid the Treasury Working Capital Fund for a variety

of centralized services. Also included in intragovernmental advances are the progress payments (advances)

for equipment and building improvements under construction. The United States Mint is undergoing an 

entity-wide security upgrade which requires progress payments be made to other federal agencies for 

construction and other related services. As of September 30, 2007 and 2006, the balances for such payments

were $1.1 million each year. The remaining balance of approximately $810 thousand represents payments

made to the United States Postal Service for product delivery services at September 30, 2007, compared to

$900 thousand paid at September 30, 2006.

Advances and Prepayments with the public consist primarily of advances for freight forwarding.

• 45 •

2007

Gross Receivables Allowance Net Receivables

Intragovernmental $5,870 $0 $5,870

With the Public 80,671 (392) 80,279

Total Accounts Receivable $86,541 ($392) $86,149

Gross Receivables Allowance Net Receivables

Intragovernmental $0 $0 $0

With the Public 28,317 (197) 28,120

Total Accounts Receivable $28,317 ($197) $28,120

September 30, 2007

September 30, 2006

2007 2006

Intragovernmental $4,452 $3,948

With the Public 1,805 1,859

Total Other Assets $6,257 $5,807
UNITED STATES MINT 

NOTE 6 CUSTODIAL GOLD AND SILVER RESERVES

As custodian, the United States Mint is responsible for safeguarding much of the nation’s gold and silver

reserves, which include deep storage and working stock. The asset and the custodial liability to Treasury are

reported on the Balance Sheet at statutory rates. In accordance with 31 U.S.C. § 5117 (b) and 31 U.S.C. §

5116 (b) (2), statutory rates of $42.2222 FTO of gold and $1.292929292 per FTO of silver are used to value

the entire custodial reserves held by the United States Mint.

The market value for gold and silver at September 30 is determined by the London Gold Fixing (PM) rate.

Amounts and values of custodial gold and silver in the custody of the United States Mint at September 30 are

as follows: 

• 46 •

2007 2006

Gold - Deep Storage:

 Inventories (FTO) 245,262,897 245,262,897

 Market Value ($ per FTO) $743.00 $599.25

 Market Value ($ in thousands) $182,230,333 $146,973,791

 Statutory Value ($ in thousands) $10,355,539 $10,355,539

Gold - Working Stock:

 Inventories (FTO) 2,783,219 2,783,219

 Market Value ($ per FTO) $743.00 $599.25

 Market Value ($ in thousands) $2,067,932 $1,667,844

 Statutory Value ($ in thousands) $117,514 $117,514

Silver - Deep Storage:

 Inventories (FTO) 7,075,171 7,075,171

 Market Value ($ per FTO) $13.65 $11.55

 Market Value ($ in thousands) $96,576 $81,718

 Statutory Value ($ in thousands) $9,148 $9,148

Silver - Working Stock:

 Inventories (FTO) 8,924,829 8,924,829

 Market Value ($ per FTO) $13.65 $11.55

 Market Value ($ in thousands) $121,824 $103,082

 Statutory Value ($ in thousands) $11,539 $11,539

Total Market Value of Custodial Gold and

 Silver Reserves ($ in thousands) $184,516,665 $148,826,435

Total Statutory Value of Custodial Gold and

 Silver Reserves ($ in thousands) $10,493,740 $10,493,740
2007 2006

Raw Materials $229,440 $113,827

Work-In-Process 89,878 61,324

Inventory held for current sale 98,754 56,671

Inventory held in reserve for future sale - 21,507

Total Inventory and Related Property $418,072 $253,329

Asset Cost

Accumulated 

Depreciation and

Amortization

Total Property, Plant 

and Equipment, Net

Land $2,529 $0 $2,529

Structures, Facilities and Leasehold Improvements 189,274 (116,715) 72,559

Computer Equipment 30,212 (26,485) 3,727

ADP Software 92,290 (86,689) 5,601

Construction-In-Progress 21,584 - 21,584

Machinery and Equipment 236,715 (124,701) 112,014

Total Property, Plant and Equipment, Net $572,604 ($354,590) $218,014

Asset Cost

Accumulated 

Depreciation and 

Amortization

Total Property, Plant 

and Equipment, Net

Land $2,529 $0 $2,529

Structures, Facilities and Leasehold Improvements 198,181 (116,363) 81,818

Computer Equipment 30,593 (24,287) 6,306

ADP Software 92,188 (81,648) 10,540

Construction-In-Progress 8,496 - 8,496

Machinery and Equipment 220,401 (96,696) 123,705

Total Property, Plant and Equipment, Net $552,388 ($318,994) $233,394

September 30, 2007

September 30, 2006

ANNUAL REPORT

NOTE 7 INVENTORY AND RELATED PROPERTY

The components of inventories and related property at September 30 are summarized below:

Raw materials consist of unprocessed materials and byproducts of the manufacturing process and the metal

value of unusable inventory such as scrap or condemned coins that will be recycled into a usable raw 

material. In addition, the inventory includes $27.0 million in fair value silver hedge activity of which 

additional information can be found in note 20. Work-in-process consists of semi-finished materials.

Inventory held for current sale is finished goods inventories. Inventory held in reserve for future sale consists

of golden dollar coin coil, all of which was consumed in FY 2007.

NOTE 8 PROPERTY, PLANT AND EQUIPMENT, NET

Components of property, plant and equipment are as follows:

United States Mint facilities used to manufacture circulating coinage and numismatic products are owned by

the United States Mint and located in San Francisco, California; Philadelphia, Pennsylvania; Denver,

Colorado; and West Point, New York. In addition, the United States Mint owns the land and buildings at

the United States Bullion Depository at Fort Knox.

Depreciation and amortization expenses charged to operations during the years ended September 30, 2007

and 2006, were $37.9 million and $56.7 million, respectively.

• 47 •

2007
UNITED STATES MINT 

NOTE 9 HERITAGE ASSETS

One mission of the United States Mint is to manufacture coins for circulation and numismatic sales. Assets

classified as heritage assets are predominately coins manufactured in prior years that are held for historical

archival purposes. These coins are examples of the various coins produced by the United States Mint over

the years. Also included in heritage assets are selected artifacts (e.g., balances/scales, obsolete manufacturing

equipment, examples of daily activity, etc.) that were used in years past. The United States Mint generally

does not place a value on heritage assets, even though some of the coins and artifacts are priceless. However,

the assets are accounted for and controlled for protection and conservation purposes.

NOTE 10 LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Components of Liabilities Not Covered by Budgetary Resources at September 30 are as follows:

Liabilities not covered by budgetary resources represent amounts owed in excess of available funds, other

amounts or custodial liabilities to Treasury that are entirely offset by custodial gold and silver reserves held

by the United States Mint on behalf of the Federal Government.

NOTE 11 RETIREMENT PLANS AND OTHER POST-EMPLOYMENT COSTS

(IMPUTED FINANCING)

At the end of FY 2007, 326 United States Mint employees participated in the Civil Service Retirement System

(CSRS), to which the United States Mint contributes seven percent of basic pay. On January 1, 1987, the

Federal Employees’ Retirement System (FERS) went into effect pursuant to P.L. 99-335. Most employees

hired after December 31, 1983 are automatically covered by FERS and Social Security. Employees hired prior

to January 1, 1984 could elect to join FERS or remain in CSRS.

A primary feature of FERS is that it offers a savings plan to which the United States Mint automatically 

contributes one percent of basic pay and matches any employee contributions up to an additional four 

percent of basic pay. Employees can contribute any dollar amount or percentage of their basic pay as long

as the annual dollar total does not exceed the Internal Revenue Code limit of $15,500 for FY 2007.

Employees participating in FERS are covered by the Federal Insurance Contribution Act (FICA) for which

the United States Mint contributes a matching amount to the Social Security Administration.

Although the United States Mint contributes a portion for pension benefits and makes the necessary payroll

deductions, it is not responsible for administering either CSRS or FERS. Therefore, the United States Mint

does not report CSRS or FERS assets, accumulated plan benefits or unfunded liabilities, if any, applicable to

• 48 •

2007 2006

Custodial Gold Reserves (Deep Storage) $10,355,539 $10,355,539

Custodial Silver Reserves (Deep Storage) 9,148 9,148

Working Stock Inventory-Gold 117,514 117,514

Working Stock Inventory-Silver 11,539 11,539

Total Liabilities Not Covered by Budgetary Resources $10,493,740 $10,493,740

Total Liabilities Covered by Budgetary Resources 121,352 118,288

Total Liabilities $10,615,092 $10,612,028
ANNUAL REPORT

the United States Mint employees. Reporting such amounts is the responsibility of the Office of Personnel

Management (OPM). OPM has provided the United States Mint with certain cost factors that estimate the

cost of providing the pension benefit to current employees. The cost factors of 25.0 percent of basic pay for

CSRS-covered employees and 12.0 percent of basic pay for FERS-covered employees were in use for FY 2007.

These cost factors remain unchanged from FY 2006. 

The amounts that the United States Mint contributed to the retirement plans and social security for the year

ended September 30 are as follows:

The United States Mint is also recognizing its share of the future cost of post-retirement health benefits and

life insurance for employees while they are still working with an offset classified as imputed financing. OPM

continues to report the overall liability of the Federal Government and make direct recipient payments. OPM

has also provided certain cost factors that estimate the true cost of providing the post-retirement benefit to

current employees. The cost factors relating to health benefits are $5,572 and $5,229 per employee enrolled

in the Federal Employees Health Benefits Program in FY 2007 and FY 2006, respectively. The cost factor

relating to life insurance is two-one hundredths percent (.02%) of basic pay for employees enrolled in the

Federal Employees Group Life Insurance Program for both FY 2007 and FY 2006.

The amount of imputed cost incurred by the United States Mint for the year ended September 30 is as 

follows (before the offset for imputed financing):

NOTE 12 LEASE COMMITMENTS

The United States Mint as Lessee:

The United States Mint leases office and warehouse space from commercial vendors and the General Services

Administration (GSA). In addition, the agency leases copier and other office equipment from commercial

vendors and vehicles from GSA. With the exception of the commercial leases on two office buildings in

Washington, DC, all leases are one-year, or one-year with renewable option years. The two building leases

have terms of 20- and 10-years, respectively. Because all of the United States Mint’s leases are considered

cancelable, there are no minimum lease payments due.

• 49 •

2007

2007 2006

Social Security System $6,707 $8,249

Civil Service Retirement System 1,632 1,515

Federal Employees Retirement System

 (Retirement & Thrift Savings Plan) 10,858 14,883

Total Retirement Plans and Other Post-employment Cost $19,197 $24,647

2007 2006

Health Benefits $8,427 $8,266

Life Insurance 11 22

Pension Expense 2,582 2,662

Total Imputed Cost $11,020 $10,950
UNITED STATES MINT 

The United States Mint as Lessor:

The United States Mint sub-leases office space to several other federal entities in the two leased buildings in

Washington, DC. The leases vary from one-year with option years to multiple year terms. As of September 30,

2007, the United States Mint sub-leased in excess of 182,000 square feet in two leased buildings. As of

September 30, 2007, tenants include: the Internal Revenue Service, the Treasury Executive Institute, the Bureau

of the Public Debt, the U.S. Customs Service and Border Protection, the Federal Consulting Group, and the U.S.

Marshals Service. All of the subleases are operating leases and subject to annual availability of funding.

NOTE 13 CONTINGENCIES

The United States Mint is subject to legal proceedings and claims which arise in the ordinary course of its

business. Judgments, if any, resulting from pending litigation against the United States Mint generally would

be satisfied from the PEF. Likewise, under the Notification and Federal Employee Antidiscrimination and

Retaliation Act of 2002 (No FEAR Act, P. L. 107-174), settlements and judgments related to acts of 

discrimination and retaliation for whistleblowing will be paid from the PEF. In the opinion of management,

the ultimate resolution of these actions will not materially affect the United States Mint’s financial position

or the results of its operations.

Asserted and pending legal claims for which loss is reasonably possible were estimated to range from zero to

$21.1 million at September 30, 2007. The United States Mint is subject to various other legal proceedings

and claims. In management's opinion, the ultimate resolution of other actions will not materially affect the

United States Mint’s financial position or net cost.

NOTE 14 EARMARKED FUNDS

P. L. 104-52 provides that “all receipts from United States Mint operations and programs, including the 

production and sale of numismatic items, the production and sale of circulating coinage at face value to the

FRB, the protection of government assets, and gifts and bequests of property, real or personal shall be

deposited into the PEF and shall be available to fund its operations without fiscal year limitations.” The PEF

meets the requirements of an earmarked fund as defined in SFFAS 27, Identifying and Reporting Earmarked

Funds.

NOTE 15 INTRAGOVERNMENTAL COSTS AND EARNED REVENUE

Intragovernmental costs and earned revenue reflect transactions in which both the buyer and seller are federal

entities. Revenue with the public reflects transactions for goods or services with a non-federal entity. However,

if a federal entity purchases goods or services from another federal entity and sells those goods to the public,

the revenue would be classified as “with the public,” but the related expense would be classified as 

“intragovernmental.” The purpose for this classification is to enable the Federal Government to prepare 

consolidated financial statements. The following table provides earned revenues, gross cost, and net program

revenue.

• 50 •
ANNUAL REPORT

• 51 •

2007

NUMISMATIC PRODUCTION AND SALES 2007 2006

Cost:

 Intragovernmental:

 Selling, General and Administrative $9,091 $30,870

 Imputed Costs 2,204 2,190

 Total Intragovernmental Costs 11,295 33,060

 Public:

 Cost of Goods Sold 739,506 858,577

 Selling, General and Administrative 67,383 50,054

 Total Public Cost 806,889 908,631

 Gross Cost 818,184 941,691

Revenue:

 Intragovernmental:

 Rent Revenues 8,471 7,852

 Other Intragovernmental Revenues 260 139

 Total Intragovernmental Revenues 8,731 7,991

 Public 862,741 1,019,170

 Total Earned Revenue 871,472 1,027,161

Net Program Revenue ($53,288) ($85,470)

NUMISMATIC PRODUCTION AND SALES OF CIRCULATING COINS

Cost:

 Intragovernmental:

 Selling, General and Administrative $474 $792

 Imputed Costs

 Total Intragovernmental Costs

- -

 474 792

 Public:

 Cost of Goods Sold 5,020 8,384

 Selling, General and Administrative 3,517 1,283

 Total Public Cost 8,537 9,667

 Gross Cost 9,011 10,459

Revenue:

 Public 9,011 10,459

 Total Earned Revenue 9,011 10,459

Net Program Revenue $0 $0

CIRCULATING PRODUCTION AND SALES

Cost:

 Intragovernmental:

 Selling, General and Administrative $21,622 $42,227

 Imputed Costs 8,815 8,760

 Total Intragovernmental Costs 30,437 50,987

 Public:

 Selling, General and Administrative 604,688 484,324

 Imputed Costs 71,830 52,319

 Other Costs and Expenses (Mutilated and Uncurrent) 15,627 15,722

 Total Public Cost 692,145 552,365

 Gross Cost 722,582 603,352

Revenue:

 Public 722,582 603,352

 Total Earned Revenue 722,582 603,352

Net Program Revenue $0 $0

Net Revenue Before Protection of Assets ($53,288) ($85,470)
UNITED STATES MINT 

NOTE 16 EARNED REVENUES AND OTHER FINANCING SOURCE

(SEIGNIORAGE)

Earned revenues and other financing source (seigniorage), whether from the FRB or from the public, are recognized

upon the shipment of circulating coins and numismatic sales of circulating coins. A portion of the earned 

revenue from circulating production and sales displayed on the United States Mint’s Statement of Net Cost is

generated by goods and services provided to the public or to other federal entities. Revenue is limited to the

recovery of all costs associated with the production, administration and distribution of circulating coins (both

to the FRB and to the public), and payment by the United States Mint for mutilated and uncurrent coins. The

difference between the face value of coins and cost is other financing source (seigniorage). A portion of other

financing source (seigniorage) is returned to the Treasury General Fund as an off-budget receipt. The United

States Mint transfers to the Treasury General Fund amounts in the PEF determined to be in excess of amounts

required to finance operations and programs. After recovering all costs from numismatic sales, the remaining

profit returned to the Treasury General Fund as an on-budget receipt.

The components of circulating coins and numismatic sales of circulating coins for the year ended September

30 are as follows:

NOTE 17 APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

The United States Mint receives apportionments of its resources from OMB. An apportionment is a plan,

approved by the OMB, to spend resources provided by law. All United States Mint obligations are classified

as reimbursable, as they are financed by offsetting collections received in return for goods and services 

provided. OMB usually uses one of two categories to distribute budgetary resources. Category A 

apportionments distribute budgetary resources by fiscal quarters. Category B apportionments typically 

distribute budgetary resources by activities, projects, objects or a combination of these categories. The

United States Mint has only category B apportionments.

• 52 •

PROTECTION OF ASSETS

 Public:

 Protection Cost $37,683 $42,886

 Total Earned Revenue - (59)

Net Cost of Protection of Assets $37,683 $42,827

Net Revenue from Operations ($15,605) ($42,643)

2007 2006

Revenue-FRB $722,582 $603,352

Other Financing Source (Seigniorage)-FRB 1,005,194 668,506

Total Circulating Coins $1,727,776 $1,271,858

Revenue-with the public $9,011 $10,459

Other Financing Source (Seigniorage)-with the public 27,090 13,974

Total Numismatic Sales of Circulating Coins $36,101 $24,433
ANNUAL REPORT

Details of Obligations Incurred as of September 30 are as follows:

NOTE 18 EXPLANATION OF DIFFERENCES BETWEEN THE 

STATEMENT OF BUDGETARY RESOURCES AND THE BUDGET OF

THE UNITED STATES GOVERNMENT

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

Sources and Concepts for Reconciling Budgetary and Financial Accounting, requires an explanation of 

material differences between budgetary resources available, the status of those resources, and outlays as 

presented in the Statement of Budgetary Resources to the related actual balances published in the Budget of

the United States Government (President’s Budget). The President’s Budget with actual numbers for fiscal

year 2007 is expected to be published in February 2008 and made available through OMB. The following

chart displays the differences between the Statement of Budgetary Resources and the actual FY 2006 balances

included in the FY 2008 President’s Budget. The explanation for the differences is two-fold. First, there is a

timing difference between the preparation of the Statement of Budgetary Resources and the President’s

Budget. Items that may have been incorporated into the final Statement of Budgetary Resources would not

appear in the President’s Budget, which is based on the final TIER submission to Treasury. Secondly, as part

of the conversion to a budgetary accounting system from a non-budgetary system, the United States Mint and

the Administrative Resource Center made necessary corrections to budgetary account balances.

• 53 •

2007

(in thousands)

2007 2006

Reimbursable:

 Category B

 Total Operating Expenses $1,809,473 $1,618,526

 Numismatic Capital 9,245 11,162

 Circulating and Protection Capital 12,337 9,050

Total Apportionment Categories of Obligations Incurred $1,831,055 $1,638,738

United States Mint Public Enterprise Fund

Total Budgetary Resources $1,679,287 $1,635,240

Status of Budgetary Resources:

 Obligations Incurred 1,638,738 1,527,301

 Unobligated Balances-available 40,549 107,939

Total Status of Budgetary Resources $1,679,287 $1,635,240

Net Outlays ($30,530) ($30,530)

September 30, 2006

Statement of Budgetary 

Resources President's Budget
UNITED STATES MINT 

NOTE 19 LEGAL ARRANGEMENTS AFFECTING USE OF

UNOBLIGATED BALANCES

The United States Mint PEF establishes that all receipts from United States Mint operations and programs,

including the production and sale of numismatic items, the production and sale of circulating coinage, the

protection of Government assets, and gifts and bequests of property, real or personal, shall be deposited into

the United States Mint PEF and shall be available without fiscal year limitations. Any amount that is in

excess of the amount required by the United States Mint to cover obligations shall be transferred to the

Treasury for deposit as miscellaneous receipts. At September 30, 2007 and 2006, the United States Mint

transferred excess receipts to the Treasury General Fund of $825 million and $750 million, respectively.

NOTE 20 HEDGING PROGRAM 

The United States Mint has engaged in a hedging program since FY 2006 to avoid fluctuation in silver costs

as a result of the changes in market prices. The United States Mint purchases silver in large quantities and

sells an interest in that silver to a trading partner, while maintaining physical custody and title of the silver.

Sales of silver to the trading partner are made at the same spot price that the United States Mint paid to

obtain the silver on the open market. The partner’s interest in United States Mint silver is reduced as finished

silver coins are sold to authorized purchasers (AP’s). Repurchases of the trading partner’s interest in the 

silver occurs upon sale of coins by the United States Mint. Repurchases are made on the same day as sales,

in the same quantity sold, and using the same spot price as was used for the sale to the AP. Each sale to and

from the purchaser carries a small transaction fee, the selling and buying fees net to a cost of one half cent

per ounce. To date, the United States Mint has incurred $43 thousand in hedging fees causing minimal

impact on the statement of net cost.

The $27.0 million in hedging activity included in inventory represents the value of the silver sold to the 

trading partner and not yet sold by the United States Mint, and therefore not repurchased from the trading

partner. In FY 2007, the United States Mint recorded an unrealized gain from hedging activity of $1.6 

million.

• 54 •
ANNUAL REPORT

NOTE 21 RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

• 55 •

2007

2007 2006

Resources Used to Finance Activities:

 Budgetary Resources Obligated

 Obligations Incurred $1,831,055 $1,638,738

 Less: Spending Authority from Offsetting collections and Recoveries 1,886,594 1,650,417

Net Obligation (55,539) (11,679)

Other Resources

 Transfers to the Treasury General Fund On-Budget (43,000) (84,000)

 Transfers to the Treasury General Fund Off-Budget (782,000) (666,000)

 Imputed Financing from Costs Absorbed by Others 11,020 10,950

 Other Financing Sources (Seigniorage) 1,032,284 682,480

Net Other Resources Used to Finance Activities 218,304 (56,570)

Total Resources Used to Finance Activities 162,765 (68,249)

Resources Used to Finance Items Not Part of the Net Cost of Operations:

 Change in Budgetary Resources Obligated for Goods, Services and Benefits

 Ordered but Not Yet Provided 18,246 13,456

 Resources that Finance the Acquisition of Assets or Liquidation of Liabilities 189,814 99,315

 Other (43,000) (84,000)

Total Resources Used to Finance Items Not Part of the Net Cost of Operations: 165,060 28,771

Total Resources Used to Finance the Net Cost of Operations (2,295) (97,020)

Components Requiring or Generating Resources in Future Periods

 Increase in Exchange Revenue Receivble from the Public (52,159) (13,219)

Total Components of Net Cost of Operations that will Require or 

 Generate Resources in Future Periods (52,159) (13,219)

Components not Requiring or Generating Resources in the Current Period:

 Depreciation and Amortization 37,879 56,666

 Revaluation of Assets (1,437) 11,068

 Other 2,407 (138)

Total Components of Net Revenue from Operations that will not require

or Generate Resources 38,849 67,596

Total Components of Net Revenue from Operations that will not require

or Generate Resources in the Current Period (13,310) 54,377

Net Revenue from Operations ($15,605) ($42,643)

For The Years Ended September 30,
UNITED STATES MINT 

• 56 •

REQUIRED SUPPLEMENTARY INFORMATION 

(UNAUDITED)
ANNUAL REPORT

INTRODUCTION

This section provides the Required Supplemental Information as prescribed by the Office of Management and

Budget (OMB) Circular A-136, “Financial Reporting Requirements.”

HERITAGE ASSETS

The United States Mint is steward of a large, unique, and diversified body of heritage assets that are both 

collection and non-collection in nature. These items include a variety of rare and semi precious coin 

collections and historical artifacts, and are held at various United State Mint locations. Some of these items

are placed in locked vaults within the United States Mint where access is limited to only special authorized

personnel. Other items are on full display to the public requiring little if any authorization to view. Items

on display are accounted for and controlled for protection and conservation purposes. 

The United States Mint has created two categories to account for the large and varied stock of heritage assets.

These categories include coin collections and historical artifacts. The table below summarizes the United

States Mint’s collection and non-collection type heritage assets balance as of September 30, 2007. Overall,

the United States Mint heritage assets, both collection and non-collection type, are in good condition.

• 57 •

2007

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

FOR THE YEAR ENDED SEPTEMBER 30, 2007

HISTORICAL ARTIFACTS QUANTITY OF ITEMS HELD SEPTEMBER 30, 2007

Furniture Collections (includes antiques) 2

Equipment Collection 1

Total 3

COIN COLLECTIONS QUANTITY OF ITEMS HELD SEPTEMBER 30, 2007

Non Precious Metal Coin Collection 1

Silver Coin Collection 1

Gold And Extremely Rare Coin Collection 1

Total 3
50 

KPMG LLP

2001 M Street, NW 

Washington, DC 20036

KPMG LLP. KPMG LLP, a U.S. limited liability partnership, is 

a member of KPMG International, a Swiss cooperative. 

Independent Auditors’ Report on Internal Control 

Inspector General 

United States Department of the Treasury 

Director 

United States Mint: 

We have audited the balance sheets of the United States Mint as of September 30, 2007 and 2006 

and the related statements of net cost, changes in net position, and combined statements of 

budgetary resources (hereinafter referred to as “financial statements”) for the years then ended, 

and have issued our report thereon dated December 4, 2007. As disclosed in Note 1 to the 

financial statements, the United States Mint changed its method of reporting the reconciliation of 

budgetary resources obligated to the net cost of operations in fiscal year 2007. 

We conducted our audits in accordance with auditing standards generally accepted in the United 

States of America; the standards applicable to financial audits contained in Government Auditing 

Standards, issued by the Comptroller General of the United States; and Office of Management 

and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements. 

Those standards and OMB Bulletin No. 07-04 require that we plan and perform the audits to 

obtain reasonable assurance about whether the financial statements are free of material 

misstatement. 

INTERNAL CONTROL OVER FINANCIAL REPORTING 

The management of the United States Mint is responsible for establishing and maintaining 

effective internal control. In planning and performing our fiscal year 2007 audit, we considered 

the United States Mint’s internal control over financial reporting by obtaining an understanding 

of the design effectiveness of the United States Mint’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 financial statements. We limited our internal control testing to those controls 

necessary to achieve the objectives described in Government Auditing Standards and OMB 

Bulletin No. 07-04. We did not test all internal controls relevant to operating objectives as 

broadly defined by the Federal Managers’ Financial Integrity Act of 1982. The objective of our 

audit was not to express an opinion on the effectiveness of the United States Mint’s internal 

control over financial reporting. Accordingly, we do not express an opinion on the effectiveness 

of the United States Mint’s internal control over financial reporting. 

Our consideration of internal control over financial reporting was for the limited purpose 

• 58 •
described in the preceding paragraph of this section 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 the United States Mint’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 the 

United States Mint’s financial statements that is more than inconsequential will not be prevented 

or detected by the United States Mint’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 the United States Mint’s internal control. 

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

deficiency in internal control over financial reporting. We believe that the significant deficiency 

presented in Exhibit I is a material weakness. Exhibit II presents the status of prior year 

reportable conditions. 

The United States Mint’s response to the findings identified in our audit is presented in Exhibit 

III. We did not audit the United States Mint’s response and, accordingly, we express no opinion 

on it. 

INTERNAL CONTROL OVER PERFORMANCE MEASURES

As required by OMB Bulletin No. 07-04 in our fiscal year 2007 audit, with respect to internal

control related to performance measures determined by management to be key and reported in

Management’s Discussion and Analysis, we obtained an understanding of the design of internal

controls relating to the existence and completeness assertions and determined whether these

internal controls had been placed in operation. We limited our testing to those controls necessary

to report deficiencies in the design of internal control over key performance measures in

accordance with OMB Bulletin 07-04. However, our procedures were not designed to provide an

opinion on internal control over reported performance measures and, accordingly, we do not

provide an opinion thereon. In our fiscal year 2007 audit, we noted no deficiencies involving the

design of the internal control over the existence and completeness assertions related to key

performance measures that we consider to be material weaknesses as defined above.

This report is intended solely for the information and use of the United States Mint’s

management, the Department of the Treasury’s Office of Inspector General, OMB, 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. 

 

December 4, 2007 

• 59 •

KPMG LLP. KPMG LLP, a U.S. limited liability partnership, is 

a member of KPMG International, a Swiss cooperative. 
Exhibit I 

THE UNITED STATES MINT 

Material Weakness 

September 30, 2007 

Improvement needed in Internal Controls related to Financial Accounting and Reporting

The United States Mint encountered a number of challenges resulting from the fiscal year 2007 conversion 

to Oracle Financial Systems (Oracle) utilized by the Bureau of the Public Debt’s (BPD) Administrative 

Resource Center (ARC), the United States Mint’s financial service provider. 

Although the United States Mint conducted pre-conversion testing, it encountered implementation issues 

related to converting data from its legacy accounting system and developing new accounting processes to 

effectively implement the new system. Key reconciliations, and reports needed for management, were not 

available following the conversion to Oracle for approximately the first half of the fiscal year. In addition 

the financial reporting process lacked sufficient policies, procedures and internal controls to ensure 

accurate and timely financial reporting throughout the year. Specifically we noted: 

• Reconciliations were not performed in inventory and financial reporting; 

• Lack of management oversight related to human resource payroll reconciliations and journal 

entry approval; 

• Policies and procedures were not in place or were not updated accurately to reflect the new 

controls and management oversight needed related to the conversion to ARC for inventory 

and budgetary resources; and 

• Inaccurate accounting information in the opening balances for budgetary accounts, 

manufacturing, as well as plant, property, and equipment. 

The United States Mint implemented a corrective action plan in the third quarter of the fiscal year, and as 

of fiscal year-end all weakness were corrected. However, for a significant portion of the fiscal year, the 

Mint did not have adequately designed controls to prevent or detect a material misstatement in the 

financial statements. 

Also during the United States Mint’s physical inventory, we noted significant adjustments were made to 

the subsidiary ledger because physical counts did not agree with the subsidiary general ledger. Included in 

these adjustments, were metal by-products of the manufacturing process that were located in the facilities; 

however, they were not in the planned physical inventory counts nor accounted for on the subsidiary 

ledger. We noted these adjustments were made because the United States Mint was not utilizing the new 

financial system appropriately. Furthermore, a significant reclassification was necessary between workin-process and raw material due to system conversion issues.

OMB Circular A-123, Managements Responsibility for Internal Control, defines management’s 

responsibility and provides guidance to Federal managers on improving the accountability and 

effectiveness of Federal programs and operations by establishing, assessing, correcting, and reporting on 

internal control. In addition the circular states that “transactions should be promptly recorded, properly 

classified, and accounted for in order to prepare timely accounts and reliable financial and other reports.” 

GAO Standards for Internal Control in the Federal Government holds that transactions should be

• 60 •
Exhibit I 

THE UNITED STATES MINT 

Material Weakness 

September 30, 2007 

properly authorized, documented, and recorded accurately and timely. 

Recommendations: We recommend that the United States Mint: 

1. Develop controls and processes related to the recording and tracking of inventory movements in the 

financial statement system to ensure the subsidiary ledger agrees to the inventory physical located at 

the facilities. 

2. Establish a policy and procedure for the accounting treatment of metal by-product located at the 

United States Mint that is not in the subsidiary ledger. 

• 61 •
• 62 •

Exhibit II 

THE UNITED STATES MINT 

Prior Year Reportable Conditions 

September 30, 2007

Prior Year 

Condition

Prior Year 

Recommendation

Status as of 

September

30, 2007 

Improvement is needed in Financial Accounting and Reporting

Assignment of 

Personnel 

Resources 

Recommendation #1: Evaluate the existing financial management 

organizational structure and make appropriate changes to ensure that the 

Office of Corporate Accounting is provided with sufficient staff 

resources with the requisite skills and abilities to maintain the Mint’s 

accounting records and prepare timely financial reports. 

Closed 

Financial 

Management 

Oversight 

Recommendation #2: Establish procedures for performing periodic 

reviews to assess the sufficiency of financial policies and procedures 

and consistencies between production facilities. 

Recommendation #3: Develop procedures for providing oversight and 

guidance to the Mint production facilities and all departments within the 

Mint that provide key financial information. 

Recommendation #4: Implement formal policies and procedures that 

require all accounting records to be signed-off by both the preparer and 

a management level reviewer. 

Closed 

Property 

Plant and 

Equipment 

Management

Recommendation #5: Implement adequate security and physical 

control procedures to ensure that all assets are adequately safeguarded 

and properly accounted for. 

Recommendation #6: Strengthen the policies and procedures over 

purchasing assets to ensure that all assets are recorded in the Asset 

Management Module of PeopleSoft timely, when received at the 

relevant locations. 

Recommendation #7: Implement policies and procedures requiring the 

program managers to communicate information regarding the status of 

the CIP projects to the Office of Corporate Accounting at or near each 

period end, and perform timely follow-up procedures to ensure that the 

Mint’s financial statements reflect the most current project status. 

Recommendation #8: Establish an internal review process that requires 

a supervisor to systematically review the transactions recorded in the 

Asset Management module of PeopleSoft timely. 

Closed 

Budgetary 

Resources 

Accounting 

Recommendation #9: Develop Mint-wide policies and procedures for 

management to perform adequate review of all obligations. The policies 

and procedures should provide for central management control and 

review, to ensure adequate support for recorded amounts exists and that 

sufficient consideration is given to the legitimacy of unliquidated 

Closed 
• 63 •

Exhibit II 

THE UNITED STATES MINT 

Prior Year Reportable Conditions 

September 30, 2007 

Prior Year 

Condition 

Prior Year 

Recommendation 

Status as of 

September 

30, 2007 

obligation amounts. 

Recommendation #10: The Oracle general ledger system fully uses the 

United States Government Standard General Ledger and will support 

accounting for the budgetary effects of transactions to ensure 

compliance with FFMIA. 

Recommendation #11: The Oracle system records obligations as 

incurred and manages funds control at the transaction level.
KPMG LLP

2001 M Street, N.W.

Washington, DC 20036

Ladies and Gentlemen:

We have reviewed the fiscal year 2007 draft auditors’ report and are in substantial agreement with

the reported observations. The United States Mint recognizes the need for strong internal controls

and is taking corrective actions to address the noted deficiencies. We have made significant

progress toward resolving the reported issues and will continue to work with KPMG and the

Office of Inspector General in identifying the specific actions that will ensure we have adequately

identified and have taken appropriate corrective action.

Sincerely,

Patricia M. Greiner

Chief Financial Officer

• 64 •

DEPARTMENT OF THE TREASURY

UNITED STATES MINT

WASHINGTON, D.C. 20220 EXHIBIT III

December 4, 2007
• 65 •

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036

Independent Auditors’ Report on Compliance and Other Matters 

Inspector General 

United States Department of the Treasury 

Director 

United States Mint: 

We have audited the balance sheets of the United States Mint as of September 30, 2007 and 2006, 

and the related statements of net cost, changes in net position, and combined statements of 

budgetary resources (hereinafter referred to as “ financial statements”) for the years then ended, 

and have issued our report thereon dated December 4, 2007. As disclosed in Note 1 to the 

financial statements, the United States Mint changed its method of reporting the reconciliation of 

budgetary resources obligated to the net cost of operations in fiscal year 2007. 

We conducted our audits in accordance with auditing standards generally accepted in the United 

States of America; the standards applicable to financial audits contained in Government Auditing 

Standards, issued by the Comptroller General of the United States; and Office of Management 

and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements. 

Those standards and OMB Bulletin No. 07-04 require that we plan and perform the audit to 

obtain reasonable assurance about whether the financial statements are free of material 

misstatement. 

The management of the United States Mint is responsible for complying with laws, regulations, 

and contracts applicable to the United States Mint. As part of obtaining reasonable assurance 

about whether the United States Mint’s financial statements are free of material misstatement, we 

performed tests of the United States Mint’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 financial statement amounts, and certain provisions of other laws and 

regulations specified in OMB Bulletin No. 07-04, including certain provisions referred to in the 

Federal Financial Management Improvement Act of 1996 (FFMIA). 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 the United States Mint. However, 

providing an opinion on compliance with those provisions was not an objective of our audit, and 

accordingly, we do not express such an opinion. 

The results of our tests of compliance described in the preceding paragraph of this report, 

exclusive of those referred to in FFMIA, disclosed no instances of noncompliance or other 

matters that are required to be reported herein under Government Auditing Standards or OMB 

Bulletin No. 07-04. 
• 66 •

Under OMB Bulletin No. 07-04 and FFMIA, we are required to report whether the United States 

Mint’s financial management systems substantially comply with (1) Federal financial 

management systems requirements, (2) applicable Federal accounting standards, and (3) the 

United States Government Standard General Ledger at the transaction level. To meet this 

requirement, we performed tests of compliance with FFMIA Section 803(a) requirements. 

The results of our tests of FFMIA disclosed no instances in which the United States Mint’s 

financial management systems did not substantially comply with the three requirements discussed 

in the preceding paragraph.

This report is intended solely for the information and use of the United States Mint’s 

management, the Department of the Treasury’s Office of Inspector General, OMB, 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. 

December 4, 2007 

TREASURY

U N ITE D STATES MI N T

TREASURY

U N ITE D STATES MI N T

www.usmint.gov