U N I T E D S T A T E S M I N T

2 0 0 2

ANNUAL REPORT
U N I T E D S T A T E S M I N T

The Mission of the

United States Mint

is to manufacture

the highest quality

circulating, numismatic,

and bullion coins at

the lowest possible cost

and to deliver them in

a timely manner...to expand

our markets through 

exceptional customer service,

product development, and 

innovative marketing... 

to sell numismatic and

bullion products at a

reasonable price and 

profit...and to provide

security over assets

entrusted to us.
United States Mint Team Vision

The United States Mint will:

Provide Value to the American people;

Ensure Integrity in our commitments and communications;

Achieve world-class Performance.

PRIORITIES

Business Results: We all will achieve excellent business results.

We will continuously improve our business, measuring ourselves

against world-class organizations. Our investments in the

United States Mint will be prudent and thoughtful to provide the

best return on investment to the American people.

Stakeholders: We value and are inclusive of our stakeholders

and hold ourselves accountable for ensuring honest, open and

timely communications. We will meet or exceed their expectations in achieving world class performance.

Products: We are our products. We will meet the highest levels

of quality, innovation, and efficiency.

Involved People: We value all our people. We will provide

them a safe workplace and the tools and training they need. We

will offer an innovative and flexible working environment where

everyone can make a contribution each day.

For further information, contact us at:

United States Mint

801 Ninth Street, N.W.

Washington D.C. 20220 

(202) 354.7200

Visit us at www.usmint.gov

Founded in 1792, the United

States Mint became a bureau of

the Treasury Department in 1873

and today is the world’s largest

coin manufacturer, with operations

in California, Kentucky, Maryland,

New York, Pennsylvania and

Washington D.C.
U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

Letter from the Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Manufacturing Circulating Coinage . . . . . . . . . . . . . . . . . . . . . . .6

Sales and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Office of the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . .10

Office of the Chief Information Officer . . . . . . . . . . . . . . . . . . .12

Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . .14

FMFIA/FFMIA Assurance Statement . . . . . . . . . . . . . . . . . . . .29

United States Mint 2002 Products . . . . . . . . . . . . . . . . . . . . . . .30

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . .37

Reports of Independent Auditor . . . . . . . . . . . . . . . . . . . . . . . . .50

Supplemental Financial Information . . . . . . . . . . . . . . . . . . . . .60

Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62

Report of Office of Inspector General on 

Custodial Gold and Silver Reserves . . . . . . . . . . . . . . . . . . . . . .63

Schedule of Custodial Gold and Silver Reserves . . . . . . . . . . . .66

Numismatic Coins Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

Circulating Coins Minted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Dear Collectors, Customers, and Colleagues:

During Fiscal Year 2002, the United States Mint increasingly

became One Team with One Vision of value, integrity, and performance

as it achieved many solid accomplishments across its business lines. 

The performance measures we have established have achieved 

dramatic results. For example, we have

• adjusted our production levels from 23.6 billion in Fiscal Year

2001 to nearly 15 billion circulating coins in Fiscal Year 2002

to meet the needs of the economy;

• contributed $1,030,000,000 to the Treasury General Fund;

• continued to improve and streamline our manufacturing 

operations to reduce the cost of circulating coinage;

• reduced circulating cycle time from more than 300 days to

108 days;

• decreased cost per 1000 coin equivalent from $9.88 to $8.69;

• continued to work toward becoming a model of 21st century

government with world-class performance and services; 

• heightened security to protect our assets and employees; 

• strengthened our internal controls for financial operations and

technology management;

• launched five new state quarters into circulation;

• begun a dialogue with Congress on a proposal to redesign our

national coinage; and

• improved the safety of our work environment by reducing

Lost Time Accidents by 42 percent. 

The safety of our employees is not only a top priority; it is a commitment in a 21st century workplace. Therefore, when the Occupational

S a fety and Health A d m i n i s t ration (OSHA) cited concerns at the

Philadelphia Mint, we suspended production from March 4 – April 18,

2002, while we conducted a top-to-bottom review to ensure our equipment, materials, buildings, and safety procedures were updated.

We began to transform the Philadelphia facility into a model of

industrial safety. During the seven weeks production was suspended,

e m p l oyees part i c i p ated in re t raining on safety programs and 

procedures and worked to improve the cleanliness and the efficiency of

the physical plant. In response, the Denver Mint increased production,

enabling the United States Mint to meet orders for coinage without

interruption. This situation demonstrated the skills and teamwork we

have across the organization and I am quite proud of the results. Safety

will remain a top priority throughout the organization. 

We launched a number of exciting initiatives and set many new

goals for the organization in Fiscal Year 2002. We developed a new

Strategic Plan for 2002-2007 that allows us to clearly set and measure

our goals: to be a model Government Agency that matches world-class

5

“Since 1792, t h e

United States Mint

has stood for quality,

s e rv i c e, and integri t y.

Two hundred ten

ye a rs lat e r, the Mint

is revo l u t i o n i z i n g

h ow coins are made,

s o l d, p ro t e c t e d, a n d

h ow a gove rn m e n t

age n cy operat e s .”

Henrietta HolsmanFore

Director
business practices; to value and commu n i c ate with the A m e rican people; to design, s e l l , and delive r

quality products; and to respect and value our co-workers.

The Strategic Plan serves as a blueprint in redefining how we measure our progress and 

strengthen teamwork across the Mint. There is an emphasis on measurements of time, resources,

and standards by which we benchmark our programs against similar organizations. These measu re m e n t s a re driving our focus on va l u e. We can tra n s fo rm our wo rk into clear and simple pro c e s s e s

and shared improvements as we strive for world-class performance. We also are working with the

Treasury Department and others to find innovative ways to share services, to develop thoughtful

contingency plans, and to further reduce the cost of coinage in America.

I have enjoyed talking with our customers throughout the year, as we hosted a number of 

business and collectors’ forums. Coin collectors tell us that the Nation must continue to improve

the artistry and collectibility of its coinage. We are committed to listening to our customers and

doing more to provide the products and services they want and need.

One of our top pri o rities is to engage the A d m i n i s t ration and Congress in a dialogue to deve l o p

a process to redesign our national coinage. First, we are working with Congress on a proposal for

a four-year series of nickel reverse designs to commemorate the bicentennial of the Lewis and

Clark expedition. Second, we will continue our discussions on the purpose and value of national

coin redesign for other denominations. We are in a renaissance of coin design in America and

artistry is an essential part. We are exploring the creation of an exchange program with other Mints

to bring artists together to share ideas and techniques. We also have embarked on the 50 State

Q u a rt e rs

® P rogram process outre a ch project to re fine our design selection process to ensure

continuous improvement and fresh approaches. 

The business of the United States Mint mirrored the national events and trends of the past year.

The United States Mint closed for one day on September 12, 2001, and then we all went back to

work, but the economy was slower. In response, we made necessary decisions regarding budget

cuts and staffing to adjust to the lower demand for coinage. We reduced our original Fiscal Year

2002 budget by 20 percent to start the year. We saved even more by canceling procurements,

renegotiating contracts, consolidating office space, cutting back on marketing, reducing excessive

i nve n t o ries by 28 perc e n t , and trimming other non-critical expenses. As a re s u l t , we held ex p e n s e s

to 8.4 percent below our already reduced plans. 

We wo rked ve ry cl o s e ly with the Fe d e ral Reserve Banks (FRBs) to successfully schedule and 

c o o rd i n ate coin shipments to ensure fulfillment of all coin ord e rs. We fo rmed a wo rk group to

s t reamline the coin manu fa c t u ring and distri bution system and reduce the ove rall supply chain costs.

The wo rk group developed and implemented a joint macroeconomic coin demand fo recasting model,

a shared pallet tra cking ap p l i c at i o n , and a more re s p o n s ive monthly coin ord e ring pro c e s s .

As we work to transform the Mint into a world-class business, we have also looked back and

learned from our past. This annual report blends together our history and our united vision for the

future. Since 1792, the United States Mint has stood for quality, service, and integrity. Two

hundred ten years later, the Mint is revolutionizing how coins are made, sold, protected, and how

a government agency operates. Through our commitment to teamwork and excellence we can continue to build upon two centuries of progress to become a leaner, smarter, innovative organization.

Sincerely,

Henrietta Holsman Fore

Director

United States Mint

6
MANUFACTURING CIRCULATING COINAGE

This has been a year of transformation for the manufacturing Mints.

They are cleaner, safer, and employees are better trained and technologically smarter than ever before.

Responding to trends in the last fiscal year, the Manufacturing

Strategic Business Unit (SBU) has been making adjustments to meet the

demand for circulating coinage. In Fiscal Year 2002 (FY02), demand

for all coin denominations declined to reflect the slower pace of commercial activity in the United States. The United States Mint launched

the state quart e rs of Te n n e s s e e, O h i o , L o u i s i a n a , I n d i a n a , a n d

Mississippi into circulation during the 2002 calendar year.

FISCAL YEAR 2002 PRODUCTION

P E N N Y N I C K E L D I M E Q U A RT E R HALF DOLLAR D O L L A R T O TA L

P h i l a d e l p h i a 3 , 4 1 0 , 8 0 0 , 0 0 0 5 5 3 , 6 8 0 , 0 0 0 1 , 1 7 1 , 0 0 0 , 0 0 0 1 , 6 5 6 , 6 0 0 , 0 0 0 1 , 2 0 0 , 0 0 0 2 0 , 9 4 5 , 6 1 0 6 , 8 1 4 , 2 2 5 , 6 1 0

D e n v e r 4 , 2 4 0 , 4 4 0 , 0 0 0 7 1 4 , 4 8 0 , 0 0 0 1 , 3 8 8 , 5 0 0 , 0 0 0 1 , 8 0 0 , 8 6 8 , 0 0 0 0 3 , 7 3 2 , 0 0 0 8 , 1 4 8 , 0 2 0 , 0 0 0

To t a l 7 , 6 5 1 , 2 4 0 , 0 0 0 1 , 2 6 8 , 1 6 0 , 0 0 0 2 , 5 5 9 , 5 0 0 , 0 0 0 3 , 4 5 7 , 4 6 8 , 0 0 0 1 , 2 0 0 , 0 0 0 2 4 , 6 7 7 , 6 1 0 1 4 , 9 6 2 , 2 4 5 , 6 1 0

The United States Mint was able to continue producing its American

Eagle Silver bullion products due to the passage of the “Support of the

American Eagle Silver Bullion Program Act.” This bill authorized the

Treasury Secretary to purchase silver on the open market because the

Defense Logistics Agency’s Strategic and Critical Materials silver

stockpile has been depleted.

Revenues generated by the Mint’s numismatic products grew slightly,

led by a strong demand for American Eagle Silver Uncirculated 

products. In an uncertain economy, customers were again looking at

precious metals. The Mint sold 11.02 million ounces of Silver

American Eagle bullion coins — its second highest year in the history

of the program. In addition, 335,502 ounces of gold bullion and 38,200

ounces of platinum bullion were sold.

To assist in the effort to anticipate coin demand, the Mint has 

strengthened its partnership with the Federal Reserve Banks (FRB).

The Mint-FRB workgroup share information to better forecast future

coin demand. The workgroup also is working to streamline the manufacturing and distribution system and reduce supply chain costs. It

developed and implemented a joint macroeconomic coin demand 

forecasting model, and a shared pallet tracking application. 

7

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

Though not the first circulating

U.S. coin to bear the image of a

Native American profile, the

1913 Indian Head or Buffalo

Head nickel has certainly been

the most popular. Designed by

James Earle Fraser, the bison

was said to be modeled after

one named “Black Diamond,”

who lived in the New York

Zoological Gardens at the time.

The Native American was a 

composite of three different 

individuals. When the Mint

released a commemorative coin

displaying the Fraser’s design in

2001, it sold out in record time.
The Manufacturing SBU also worked to reduce the cost of making

coinage. Specifically, a Mintwide team worked with suppliers to

arrange direct shipments of strip and blanks to the Philadelphia Mint. A

reduction in the level of inventory on-hand also meant less need for 

storage space and the elimination of double handling of materials, as

well as the need for a warehouse in New Jersey, which will result in an

annual savings to the Mint of more than $2 million. 

The installation of new coining presses — the Graebener GMP-360

and Schuler MRV-300 — for Proof and Uncirculated coinage, respectively, has added to the efficiency of those programs. The Mint also 

finished installing its bulk bag filling stations in Philadelphia and

Denver which are safer for employees because they do not require

manual handling of large, heavy bags of coins. 

In addition to improving the safety and conditions of its physical

plants, the Mint’s efforts contributed to the reduction in Lost Time

Accidents (LTAs) from 3.93 in FY01 to 2.27 in FY02, a 42 percent

reduction. While this is a significant achievement and a great benefit to

the workforce, the Mint is committed to a goal of zero LTAs.

SALES AND MARKETING

Our Sales and Marketing division marked a number of notable eve n t s

in FY02. In Ju ly, the United States Mint made headlines when it 

auctioned the 1933 $20 gold coin known as a “ D o u ble Eag l e ” for $6.6

million to an anonymous bidd e r. With the addition of a 15 percent 

a u c t i o n e e r ’s pre m i u m , and the $20 face value fe e, the total purch a s e

p rice totaled $7,590,020. It is now the wo rl d ’s most va l u able coin.

The net proceeds from the sale will be divided between the United

States Mint Public Enterprise Fund and the coin dealer from whom 

the coin was recovered by the U.S. Secret Service in 1996. This is the

first and only 1933 Double Eagle monetized and issued by the United

States Mint. 

The Double Eagle, designed by Augustus Saint-Gaudens, is considered one of the most beautiful coins in the world. As with all coins 

produced by the United States Mint and used in our national economy,

coins are not only are tools of commerce, but also are symbols of our

country that honor important events, places, and people in our history.

8

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

The first gold coin

denomination struck for the

United States under the Act

of April 2, 1792, was the

Half Eagle piece. Produced

as a regular issue coin from

1795 through 1929, it was

the only United States

denomination produced at

all the mints at one time 

or another (Philadelphia,

San Francisco, Denver,

Dahlonega, Charlotte, New

Orleans, and Carson City).
For that reason, the Mint is working with Congress, the Treasury

Department, and the Administration to develop a process to redesign

our national coinage. New coin designs not only would illustrate the

country’s rich heritage and diversity, but also would increase interest in

the hobby of coin collecting.

Also of interest to collectors is the offer of selected Bureau of

Engraving and Printing (BEP) numismatic products in the Mint’s print

and electronic catalogs — including uncut currency sets. In addition,

the Mint has joined the U.S. Postal Service (USPS) in combining some

of their products — the 50 State Quarters and the “Greetings from

America” stamps. These sets are available on Mint and USPS web sites,

at selected post offices, in the USPS philatelic catalog, and at Mint retail

locations. 

Commemorative Coins

In addition to these new products, the United States Mint offered two

historic commemorative coins this past year. Both programs were

b egun in 2002, but will not conclude until FY03, so fi g u res are rep o rt e d

to date.

The 2002 Olympic Winter Games Commemorative coins celebrated

the 2002 Winter Games that were held in Salt Lake City, Utah, in

February 2002, and proceeds from the surcharges are being distributed

to the United States Olympic Committee and the Salt Lake Organizing

Committee. As of September 30, 2002, 42,523 five-dollar gold coins,

and 202,986 silver dollars were sold.

The other program for 2002 was the United States Military Academy

Bicentennial Commemor ative that celebrates the 200th anniversary of

the founding of the Military Academy a t West Point, New York. The

coins were issued on March 16, 2002 — 200 years to the day President

Je ffe rson signed legi s l ation authorizing the establishment of the

Academy. The coins will be sold until March 16, 2003. As of

S eptember 30, 2 0 0 2 , 267,184 Proof Silver Dollars , and 96,668

Uncirculated Silver Dollars were sold. The surcharges collected will be

given to the Academy’s Association of Graduates to help support the

academic, military, physical, moral, and ethical development programs

of the Corps of Cadets. 

9

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

2002 Winter Olympic

Commemorative Gold Coin

2002 Winter Olympic

Commemorative Silver Coin

2002 United States Military Academy

Bicentennial Commemorative Coin
Customer Service and Satisfaction 

The Mint’s Customer Care Center (CCC) was successfully relocated

to the agency’s headquarters building at 801 Ninth Street, N.W., in

Washington, D.C. This move completes the Mint’s business realignment as the CCC reports to the Sales and Marketing Strategic Business

Unit, and will streamline costs. 

One of the Mint’s Strategic Plan objectives is to provide excellent 

customer service and satisfaction. For six consecutive years, the Mint

has been rated among the top performers in the American Customer

Satisfaction Index. In the most recent ratings published in December

2 0 0 1 , t h e M i n t s c o re d a n 8 8 ( o n a 0-100 scale), we l l a h e a d o f

the average score of 72.6 for private sector companies and a 68.6

average rating for government agencies.

To make it easier for customers to obtain the products they want, the

Mint launched its subscription program in October enabling collectors

to subscribe to a series of products including the American Eagle Silver

Proof Coins; 50 State Quarters Official First Day Coin Covers; United

States Mint Proof Sets; 50 State Quarters Proof SetsTM; Uncirculated

Coin Sets®; and Silver Proof SetsTM.

Consumer and Business Awareness

To assist our customers in recognizing genuine United States Mint

products versus other collectibles, staff from Sales and Marketing, the

Office of the Chief Counsel, and the Office of the Chief Information

Officer created a Business and Consumer Affairs Section on the United

States Mint’s Internet web site that was launched in October 2001. The

site — www.usmint.gov/consumer — discusses replicas and colorized

versions of genuine U.S. coins, gives tips on identifying genuine U.S.

coins, and provides links to other helpful web sites for consumers. 

After three years of litigation, the United States Mint and the

Department of Justice reached a settlement with the Washington Mint,

LLC, a private company specializing in medallions and collectibles

located in Minnesota. The U.S. District Court for the District of

Minnesota found the Washington Mint liable for infringing the United

S t at e ’s Mint tra d e m a rk and for engaging in false and decep t ive 

advertising. The Washington Mint has paid the United States government $2.1 million and must serve notice to all of its customers that its

replicas of U.S. coins and medals are not legal tender. The Washington

10

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

The motto “In God We Trust”

first appeared on a U.S. coin in

1864, and had appeared on 

various coins for more than 90

years when Congress declared

that all currency and coins of the

United States bear the inscription

“In God We Trust”, signed into

law on July 11, 1955.
Mint is also permanently prohibited from producing and marketing

replicas of the Golden Dollar and must use a disclaimer in all of its

advertisements featuring United States Mint-related products stating it

is not affiliated with the federal government.

PROTECTION

While the safety and protection of our employees and assets was

always the first priority of our United States Mint Police force, after

September 11, 2001, their mission to safeguard the Mint has taken on

new magnitude. The Mint is committed to investing in additional training and the latest equipment to assist them in their important responsibilities of keeping the United States Mint and its national assets secure.

To safeguard the Mint and the public, tours of the Philadelphia and

Denver Mint were suspended in the wake of the September 11 tragedies.

After new procedures were put into place (the same followed by the

White House), the Denver Mint was reopened to the public on June 21.

The Philadelphia Mint followed suit on September 5 after building 

renovations were completed.

Because United States Mint Police officers are highly skilled professionals, they are in great demand by other agencies and therefore, the

Mint is focusing on recruiting and training more new officers in the

coming year.

The United States Mint Police measure achievement by what did not

happen. Due to their vigilance and expertise, the United States Mint’s

assets, including the gold in Fort Knox, continue to be as safe as the

gold in Fort Knox. – watch dog in Philly)

OFFICE OF THE CHIEF FINANCIAL OFFICER

Helping the United States Mint to achieve world-class status is the

major goal of the Office of the Chief Financial Officer (OCFO). The

Mint’s senior managers had to make tough, but necessary, decisions

regarding budget cuts and staffing to adjust to the demand for coinage.

Total expenses were cut by 10 percent and the Mint saved money by

canceling procurements, renegotiating contracts, consolidating office

space, cutting back on marketing, reducing excessive inventories by 28

percent, and trimming other non-critical expenses. 

11

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

Security has always been an 

important consideration for the 

United States Mint. In Philadelphia

Mint records for January 7, 1793 —

between notations of a $1 payment

to Thomas Dobson for an inkstand

and folder and $2.40 to Jacob

Kinnard for sundries — there is a 

$3 line item listing the purchase of

“a dog for the yard.” 

Nero, as he was soon called, was

“hired” by Henry Voight, the Mint’s

first superintendent and chief coiner,

to work along side the night watchman to help patrol and guard all 

sectors of the Mint. They made 

their rounds every hour, and it is 

said Nero made the trek each

evening, even if the watchman 

was absent. 

Today, the U.S. Mint Police are

responsible for protecting the assets

of the United States Treasury, and as

always, are ever vigilant. 
In addition, the OCFO staff was responsible for providing excellent

s e rvice using stro n ger internal controls to internal and ex t e rnal 

customers during the fiscal year. For example, to provide more effective management of human resources functions throughout the United

States Mint, in November 2001, the Corporate Office of Human

R e s o u rces (OHR) assumed the responsibility for supervising and 

providing oversight to all OHR field offices. This included the consolidation of all human resources personnel in the field sites and Strategic

Business Units who provide staffing, classification, training, labor and

employee labor relations to these customers. 

Along with assisting in the Customer Care Center relocation, a new

Program Review Division in the Office of Management Services was

established. The Program Review Division was charged with providing

a more proactive approach to determining the effectiveness of management controls and United States Mint corrective actions taken in

response to audit findings from the Office of the Inspector General and

the General Accounting Office.

The Mint made major changes in its Office of Procurement,including

t h e i n s t i t u t i o n o f a dd i t i o n a l ch e ck s a n d b a l a n c e s t o a s s u re t h at 

guidelines are being followed and that prudent business decisions 

are being made. A Mintwide policy was implemented that requires 

a multi-discipline acquisition team to be formed for any acquisition 

over $100,000. 

During FY02, the Office of Accounting was a leader in Treasury

Department efforts to improve the timeliness and quality of financial

reporting. The Mint was one of the first bureaus to meet Secretary

O’Neill’s target of closing the books three business days after the end of

the month. The Mint routinely submits all its monthly financial 

information within three business days. Upon review of its financial

reporting, the Mint has earned a ninth consecutive clean opinion from

independent auditors. 

In add i t i o n , the Office of Management and Budge t ’s (OMB) assessment of the Mint’s circ u l ating coinage program using the Progra m

Assessment Rating Tool (PA RT) resulted in a total score of 85 percent —

the highest ranking among all Tre a s u ry agencies. PA RT measures and

d i agnoses program perfo rmance in four critical aspects: p u rp o s e, s t rat egic planning, p rogram manage m e n t , and program results. OMB rep o rted that the progra m ’s purpose and design is clear; it has good strat egi c

goals and perfo rmance measures; it has good financial ove rs i g h t ;

12

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

The Thomas Jefferson Peace

Medal was designed to commemorate the third President of the

United States, featuring a bust of

Jefferson and two hands clasped

together, with crossed pipe and

tomahawk above. This medal

was carried across the country by

Meriwether Lewis and William

Clark, and given to a variety of

Native American chiefs from the

Omaha, Arikara, Mandan, Oto or

Pawnee, and Ponca tribes that

they met along the way during

their journey. Their journal 

indicates that the first peace

medal was presented on 

August 3, 1804, at Council

Bluffs, to a party of Otos and

Missouris tribe members.
and it has a good system of evaluating and correcting program management deficiencies. The Mint’s score and other relevant information will

be published in the President’s FY04 budget.

Finally, the Office of Financial Planning, Analysis, and Review

made major strides in the area of performance-based management. Ten

new performance indicators were developed and integrated into the

budget formulation and execution process. These measures provide 

meaningful feedback on critical elements of United States Mint operations, and move the Mint one step closer to its goal of “one-click”

decision making.

OFFICE OF THE CHIEF INFORMATION OFFICER

In addition to its work on the consumer website, the Office of the

Chief Information Officer (OCIO) addressed a number of challenges in

FY02. As a result of the 2001 financial audit, two material weaknesses

and a number of other findings related to information security were

revealed. The OCIO led a successful effort to mitigate the security

risks, mitigate future information security threats and close all the findings by September 30, 2002. These efforts included centralizing

Enterprise Resource Planning (ERP) and e-commerce systems security

management, re-engineering PeopleSoft security, logging details of key

transactions, developing a policy framework, providing information

security training, and conducting disaster recovery testing.

In response to the Secretary’s goals of providing a safe work

environment for all Treasury employees, OCIO worked closely with the

Office of the Chief Financial Officer (OCFO) to implement the Safety

and Health Information Management System (SHIMS), an electronic

rep o rt i n g s y s t e m fo r t ra ck i n g s a fe t y i n c i d e n t s a n d fi l i n g wo rke rs ’

compensation claims. 

OCIO was also re s p o n s i ble for developing Info rm ation Te ch n o l ogy

(IT) thre at assessment strat egies and counteracting any security thre at s

against Mint operations and leading the IT continge n cy planning effo rt s.

O C I O, in part n e rship with Manu fa c t u ri n g, c re ated a secure Extra n e t

ap p l i c ation — the Pallet Tra cking System (PTS). PTS was selected as

one of 16 “ Fe d e ral CIO Showcase of Excellence” d i s p l ays at the FOSE

C o nvention based on its excellence in leve raging web tech n o l ogies 

and responding to the exe c u t ive re q u i rement for increased e-gove rn m e n t

i n i t i at ive s.

13

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

Congress adopted the motto 

E Pluribus Unum (Out of many, one)

as part of the Great Seal on June

20, 1782. On September 15,

1789, as one of the first acts of 

government under the Constitution,

Congress declared the seal of 1782

to be the seal of the United States,

making this the national motto. 

It was first used by the United States

Mint on coins of the late 1790’s and

has continued to be used on coins of

various issues to this day.
Organizationally, OCIO is a streamlined, functional and more respons ive orga n i z ation. We have reduced the number of laye rs and the nu m b er

of Divisions. Budgets and projects have become more customer-centric

with requirements driven by Manufacturing and Sales and Marketing.

Furthermore, the IT function in the field offices report to the OCIO,

resulting in uniform policies throughout the organization.

CONCLUSION

In the years to come, the United States Mint will continue to accomplish greater results by working across business lines as a more efficient

and effective cross-functional team. That includes continuing to

improve its service to customers, reduce the number of lost time 

accidents to zero, and increasing the quality of its products. Much was

achieved during FY02, and in the months and years to come the United

States Mint plans to accomplish the many goals and objectives it has set

in its effort to become a model of 21st century government with worldclass performance and services.

14

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

When introduced in June of

1997, the American Eagle

Platinum Bullion Coin represented

many “firsts” for the United

States Mint:

• the first time the United States

has offered a legal tender 

platinum coin;

• the first time the Secretary of

the Treasury, not Congress,

specifies the weight, size and

design of the coin; 

• the first American bullion 

coins to contain an engraving

of the coin’s weight (reverse

side), and;

• this $100, one-ounce coin 

represents the highest-ever

denomination for a U.S. coin,

to date. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

The United States Mint’s financial results are prepared in accordance with the Chief

Financial Officer’s (CFO) Act of 1990. The Act requires federal agencies to issue annual

accountability reports. The reports include both consolidated financial statements 

reflecting the results of operations (for the Mint consisting of three distinct business 

components: Circulating Coinage, Numismatic Operations, and Protection) and a

Management’s Discussion and Analysis (MD&A), which explains program performance.

This entire document is presented to our stakeholders to inform them of our growth 

and progress.

HIGHLIGHTS

The major factor that affects the operations of the United States Mint in any given year

is the state of the economy. In times of robust economic conditions, the demand for 

circulating coinage increases, reflecting an increase in the amount of commerce being

transacted on a daily basis across the nation. Factors such as the recession, the declines

in the stock market and the consequences of the September 11 at t a cks slowed the economy

in FY02. In spite of a weak economy and the corresponding low demand for new coinage,

the Mint was able to mitigate some of the effects on profits through cost cutting and

improved business practices.

The United States Mint has developed and is continuing to refine a new set of agencywide strategic performance measures that focus on critical issues such as safety and

health, customer service and satisfaction, effective and efficient production operations,

and improved results. Examples of efforts that align with the Mint’s objectives include:

• Suspension of production operations at the Philadelphia Mint from March 4 to

April 18, 2002, to ensure that all safety concerns cited in a report by OSHA had

been addressed.

• Implementation of a Customer Relationship Management (CRM) software system

for N u m i s m atic coinage products that is expected to be more customer and user

f ri e n d ly. Start-up issues with the new CRM softwa re are being add re s s e d.

• Reduction in excessive inventories by 27.8 percent.

• I m p roved collab o ration with the Fe d e ral Reserve Bank (FRB) — the distri butor for 

c i rc u l ating coinage — to institute new pro c e d u res and tools for fo recasting demand,

o rd e ring coinage, and managing inve n t o ries. These improved pro c e d u res are

expected to cre ate a more stable production env i ronment that allows the Mint to

p ro a c t ive ly respond to anticipated ch a n ges in the underlying economic conditions.

15

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
REVENUES

The United States Mint’s revenues for FY02 were $1,804.2 million compared with

FY01 revenues of $2,423.4 million. This decline can be largely attributed to lower

demand for circulating coins coupled with finished goods inventory reductions at the

Federal Reserve.

COST & EXPENSES

The United States Mint’s Cost of Goods Sold (COGS, or the costs incurred in producing sold products) was $638.4 million in FY02 compared with $719.5 million in FY01.

The Gross Margin declined to 64.6 percent of FY02 revenues from 70.3 percent of FY01

revenues. Higher costs, lower revenues, and the difficulty in making fixed costs behave

in a variable manner during a downturn contributed to this percentage decline.

Sales, General and Administrative (SG&A) costs totaled $204.6 million in FY02, as

compared with $203.8 million in FY01. The Mint distinguishes the administrative

support necessary to support ongoing operations from various marketing efforts. In FY02,

$136.2 million was spent on general and administrative costs (G&A) in comparison with

$133.8 million in FY01. The $2.4 million increase is attributable to several factors:

including higher unemployment and workers’compensation costs and higher depreciation

expenses related to prior years’ investments in the Mint’s increasingly sophisticated 

automated systems. As a percentage of revenues, these expenses increased to 7.5 percent

in FY02, up from 5.5 percent in FY01. 

As depicted in the Circulating & Numismatic Profit & Loss tables, marketing and

advertising expenses consumed $63.5 million in FY02 as compared to $63.1 million in

FY01. The large drop in advertising expenses is primarily due to a reduction in promoting the awareness of the 50 State Quarter Program and the Golden Dollar. Senate Report

107-57 prohibited the Mint from drawing funds from the Public Enterprise Fund (PEF) to

promote the $1 coin or the circulating commemorative quarters until Congress approves a

marketing plan.

16

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
EARNINGS

The United States Mint’s FY02 earnings of $961.1 million fell 35.9 percent from FY01.

This decrease in earnings is attributable to slow economic conditions and reductions in

finished goods inventories at the Federal Reserve. Although the Mint aggressively

reduced planned FY02 expenditures and pursued other cost savings initiatives, we were

unable to reduce expenses — many of which are fixed in nature — in the same proportion as the decline in sales revenues.

CIRCULATING & NUMISMATIC PROFIT AND LOSS

FOR THE YEAR ENDED SEPTEMBER 30, 2002 (Amounts in Millions)

CIRCULATING NUMISMATIC TOTAL

REVENUE LESS SURCHARGES $1,364.2 $440.0 $1,804.2 

COST OF GOODS SOLD1309.1 329.3 638.4 

GENERAL & ADMINISTRATIVE 116.8 19.4 136.2 

DISTRIBUTION TO FRB 5.0 - 5.0 

TOTAL EXPENSES PRIOR

TO MARKETING & ADVERTISING $ 430.9 $348.7 $ 779.6 

MARKETING 0.1 51.3 51.4 

ADVERTISING 5.4 6.7 12.1 

PROFIT/(LOSS) $ 927.8 $ 33.3 $ 961.1 

CIRCULATING & NUMISMATIC PROFIT AND LOSS

FOR THE YEAR ENDED SEPTEMBER 30, 2001 (Amounts in Millions)

CIRCULATING NUMISMATIC TOTAL

REVENUE LESS SURCHARGES $2,021.4 $402.0 $2,423.4 

COST OF GOODS SOLD1421.0 298.5 719.5 

GENERAL & ADMINISTRATIVE 116.6 17.2 133.8 

DISTRIBUTION TO FRB 6.7 - 6.7 

TOTAL EXPENSES PRIOR

TO MARKETING & ADVERTISING $ 544.3 $315.7 $ 860.0

MARKETING - 35.8 35.8 

ADVERTISING 19.7 7.6 27.3 

PROFIT/(LOSS) $1,457.4 $ 42.9 $1,500.3 

1

The Cost of Goods Sold figure includes other costs associated with mutilated coins (Note 14). 

17

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
CIRCULATING COIN PRODUCTS

In comparing the above Circulating and Numismatic Profit and Loss tables, FY02 

revenues from all Circulating products dropped 32.5 percent from the prior fiscal year to

$1,364.2 million. However, Circulating COGS were $309.1 million in FY02 compared

with $421.0 million in FY01. COGS, as a percentage of revenue, rose to 22.7 percent in

FY02 from 21 percent in FY01. During the last several years, the United States Mint has

increased its circulating coinage capacity significantly. However, at the same time, the

Mint has been able to maintain a low level of manufacturing costs during periods of lower

coin demand as proven by the small percentage increase between the two years. Profits

declined to $927.8 million in FY02 from $1,457.4 million in FY01. 

The following Unit Cost of Producing and Distributing Coins charts for FY02 and FY01

reveal that unit costs per coin rose slightly as a result of lower sales. The unit costs were

also affected by the suspension of production in Philadelphia to address safety and health

issues (see above “Highlights” section). The Mint incurred operating and cleaning costs

during the shutdown and there were no revenues generated. As safety and health are

priorities at the Mint, management undertook the suspension with the knowledge that it

would negat ive ly affect perfo rmance as the facility was cleaned and painted.

Simultaneously, employees were trained and reviewed safety procedures for the six weeks

that there was no production.

UNIT COST OF PRODUCING AND DISTRIBUTING COINS

FOR THE YEAR ENDED SEPTEMBER 30, 2002

PENNY NICKEL DIME QUARTER HALF DOLLAR

COST OF GOODS SOLD $0.0085 $0.0306 $0.0187 $0.0400 $0.0664 $0.0607 

GENERAL & ADMINISTRATIVE $0.0002 $0.0023 $0.0089 $0.0229 $0.0433 $0.1049 

DISTRIBUTION TO FRB $0.0002 $0.0003 $0.0002 $0.0008 $0.0013 $0.0011 

TOTAL EXPENSES PRIOR 

TO MARKETING $0.0089 $0.0332 $0.0278 $0.0637 $0.1110 $0.1667 

UNIT COST OF PRODUCING AND DISTRIBUTING COINS

FOR THE YEAR ENDED SEPTEMBER 30, 2001

PENNY NICKEL DIME QUARTER HALF DOLLAR

COST OF GOODS SOLD $0.0077 $0.0313 $0.0169 $0.0368 $0.0558 $0.0372 

GENERAL & ADMINISTRATIVE $0.0002 $0.0016 $0.0059 $0.0149 $0.0297 $0.0891 

DISTRIBUTION TO FRB $0.0001 $0.0002 $0.0002 $0.0007 $0.0037 $0.0029 

TOTAL EXPENSES PRIOR 

TO MARKETING $0.0080 $0.0331 $0.0230 $0.0524 $0.0892 $0.1292

18

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
Along with all other Circulating products, the Golden Dollar experienced declining 

revenues. Launched in FY00, the new dollar coin features an image representing

S a c agawea and her infant son traveling with the Lewis and Clark expedition. Both intere s t

in the new design and a Federal Reserve Bank/United States Mint strategy to build inventory contributed to the Mint’s FY00 dollar coin sales of $1,019.4 million. In FY01, sales

of new dollar coins dropped to $102.2 million. As the economy slowed and the FRB and

Mint worked to reduce inventories of existing dollar coins,this decline continued in FY02

to $52.2 million. The Mint did expect the demand for the coin to level off after the initial

excitement, and is working with Congress and the FRB to improve the presence of the

new Golden Dollar in circulation.

Beginning in FY99, the 50 State Quarters Program replaced the eagle on the reverse

side of the quarter. During the last full period (FY98) of the eagle on the reverse, sales of

quarters were $419.3 million. In FY00, revenues were $1,541.9 million, and in FY01,

revenues fell to $1,382.2 million. FY02 revenues further dropped to $904.0 million.

Although revenues from the 50 State Quarters program are down 41.4 percent from peak

demand in FY00 and 34.6 percent from FY01, the program has more than doubled 

revenues over what existed before its inauguration. The FRB has built a stockpile of Stat e

Q u a rt e rs that exceeds inve n t o ry targets by 80 percent. We expect that demand for new ly

minted quart e rs will be suppressed in FY03 until this inve n t o ry is wo rked dow n.

The United States Mint shipped 7.5 billion pennies to the FRB in FY02, down from

12.8 billion pennies in FY01. Revenues and earnings are down as a result. Unit production costs for the penny remain below face value of $0.01.

Demand for the nickel, dime, and half dollar also fell from the last fiscal year. Revenue

for these coins in FY02 was $332.8 million, while revenue for these same products in

FY01 was $409.3 million. This led to lower earnings across the board — both in absolute

terms and as a percentage of revenue — due largely to spreading fixed costs across fewer

units produced.

The charts below illustrate the Circulating activity to produce each of the denominations for FY02 and FY01. The Mint depended on a mixture of both purchased and 

internally produced five-cent blanks to produce the nickel in FY01. These inventories of

purchased blanks were eliminated in FY01. In FY02, the Mint used the less expensive,

internally produced blanks, thereby preventing a significant increase in the unit cost. 

19

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
CIRCULATING PROFIT AND LOSS 

FOR THE YEAR ENDED SEPTEMBER 30, 2002 (Amounts in Millions)

PENNY NICKEL DIME QUARTER HALF DOLLAR OTHER1TOTAL

REVENUE $ 75.2 $65.1 $263.3 $ 904.0 $ 4.4 $ 52.2 $ - $1,364.2 

COST OF GOODS SOLD 63.7 39.8 49.2 144.6 0.6 3.2 8.0 309.1 

GENERAL & 

ADMINISTRATIVE 1.5 3.0 23.5 83.0 0.4 5.4 - 116.8 

DISTRIBUTION TO FRB 1.2 0.4 0.6 2.7 - 0.1 - 5.0

TOTAL EXPENSES PRIOR

TO MARKETING & 

ADVERTISING $ 66.4 $43.2 $ 73.3 $ 230.3 $ 1.0 $ 8.7 $ 8.0 $ 430.9

MARKETING - - - 0.1 - - - 0.1 

ADVERTISING - - - 3.7 - 1.7 - 5.4 

PROFIT/(LOSS) $ 8.8 $21.9 $190.0 $ 669.9 $ 3.4 $ 41.8 $(8.0) $ 927.8 

CIRCULATING PROFIT AND LOSS 

FOR THE YEAR ENDED SEPTEMBER 30, 2001 (Amounts in Millions)

PENNY NICKEL DIME QUARTER HALF DOLLAR OTHER1TOTAL

REVENUE $127.7 $83.5 $312.3 $1,382.2 $13.5 $102.2 $ - $2,021.4 

COST OF GOODS SOLD 97.8 52.3 52.9 203.7 1.5 3.8 9.0 421.0 

GENERAL & 

ADMINISTRATIVE 3.7 2.6 18.3 82.1 0.8 9.1 - 116.6 

DISTRIBUTION TO FRB 1.6 0.4 0.7 3.6 0.1 0.3 - 6.7 

TOTAL EXPENSES PRIOR

TO MARKETING & 

ADVERTISING $103.1 $55.3 $ 71.9 $ 289.4 $ 2.4 $ 13.2 $ 9.0 $ 544.3 

MARKETING - - - - - - - -

ADVERTISING - - - 12.4 - 7.3 - 19.7 

PROFIT/(LOSS) $ 24.6 $28.2 $240.4 $1,080.4 $11.1 $ 81.7 $(9.0) $1,457.4

1

Other references costs associated with mutilated coins (Note 14).

20

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
NUMISMATIC OPERATIONS

Revenues for Numismatic Operations remained strong despite a weakened economy.

Overall, total revenues actually increased to $440.0 million in FY02 from $402.0 million

in FY01. Demand for the American Eagle Uncirculated product was the largest factor

contributing to the increase in revenues, roughly $38.6 million higher from the previous

fiscal year. The American Eagle Bullion Uncirculated program has historically performed

well when there is greater volatility in the equities markets, and FY02 was no exception

as inve s t o rs moved to defe n s ive positions that included precious metals. These 

revenues/profits were further bolstered by the July 30, 2002 sale of the Augustus SaintGaudens 1933 Double Eagle for $7.59 million at Sotheby’s. The United States Mint’s

staple collectible programs — recurring and commemorative products — were flat or

down from prior years. The Numismatic Profit and Loss charts below show the detail of

the changes by major numismatic program. In addition, the same charts show the costs

and profitability of those programs. 

NUMISMATIC PROFIT AND LOSS 

FOR THE YEAR ENDED SEPTEMBER 30, 2002

AMERICAN AMERICAN

EAGLE EAGLE

UNCIRCULATED PROOF COMMEMORATIVES RECURRING TOTAL

REVENUE 

LESS SURCHARGES $186.7 $56.6 $21.9 $174.8 $440.0

COST OF GOODS SOLD 181.0 33.0 10.3 105.0 329.3 

GENERAL & 

ADMINISTRATIVE $ 1.5 $ 3.5 $ 1.6 $ 12.8 $ 19.4

TOTAL EXPENSES PRIOR

TO MARKETING & 

ADVERTISING $182.5 $36.5 $11.9 $117.8 $348.7 

MARKETING - 8.9 5.1 37.3 51.3 

ADVERTISING 0.1 1.1 1.4 4.1 6.7 

PROFIT/(LOSS) $ 4.1 $10.1 $ 3.5 $ 15.6 $ 33.3 

21

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
NUMISMATIC PROFIT AND LOSS 

FOR THE YEAR ENDED SEPTEMBER 30, 2001

AMERICAN AMERICAN

EAGLE EAGLE

UNCIRCULATED PROOF COMMEMORATIVES RECURRING TOTAL

REVENUE 

LESS SURCHARGES $148.1 $63.5 $23.8 $166.6 $402.0 

COST OF GOODS SOLD 147.3 41.3 15.5 94.4 298.5 

GENERAL & 

ADMINISTRATIVE 0.4 3.4 1.5 11.9 17.2 

TOTAL EXPENSES PRIOR

TO MARKETING & 

ADVERTISING $147.7 $44.7 $17.0 $106.3 $315.7 

MARKETING 0.6 6.3 3.0 25.9 35.8 

ADVERTISING 0.5 1.9 2.0 3.2 7.6 

PROFIT/(LOSS) $ (0.7) $10.6 $ 1.8 $ 31.2 $ 42.9

Numismatic costs rose as a percentage of revenue, as indicated by weakened profits

from normal operations that declined to $33.3 million in FY02 from $42.9 million in

FY01. Even though revenues increased, a major portion of this was due to increased sales

in the American Eagle Uncirculated (Bullion) program — a high revenue, low margin

product. As the American Eagle Uncirculated program constitutes a larger portion of

numismatic operations, the numismatic profit margin will correspondingly decrease.

The increase of G&A costs for Numismatic Operations as a percent of numismatic 

revenue is consistent with the United States Mint’s approved allocation methodology.

Reduced demand for circulating coins relative to Numismatic revenues resulted in more

general and administrative costs being allocated to Numismatics. Marketing costs also

increased as a percent of revenue due to inflation, a one time charge for the Customer Care

Center (CCC) move to Headquarters, and increased cost associated with the eSP system

(the Mint’s new CRM software solution).

22

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
PROTECTION

The United States Mint’s police fo rce conducts business each year in a quiet, ex t re m e ly

efficient and professional manner. The Mint secures approximately $79.4 billion of the

Nation’s gold and silver reserves. In FY02, the Mint shipped $1.3 billion in coins to the

FRB. Mint Police protect these assets while safeguarding approximately 2,500 Mint

employees against potential threats at six facilities.

P rotection expenses declined by 7.2 perc e n t , or $2.5 million less than FY01. This decl i n e

can be at t ri buted to effo rts to cut costs early in the fiscal ye a r.

I n c reased Protection ex p e n d i t u res are expected in the future as a direct result of the

S eptember 11, 2001 terro rist at t a cks. United States Mint police offi c e rs are highly tra i n e d

l aw enfo rcement personnel and are in demand for positions in new areas such as the

Tra n s p o rt ation Safety A d m i n i s t ration and the Air Marshal program. A re n ewed effo rt to

re c ruit and train new Mint Police Offi c e rs will re q u i re more spending.

CAPITAL INVESTMENTS

Investment in capital is crucial to the United States Mint’s ability to meet public 

demand for coinage, maintain the United States Mint and FRB inventories, as well as

manage costs.

Major capital investments identified in the United States Mint’s plan included 

1) improving coin press equipment and operations, 2) renovating and upgrading the Mints,

and 3) upgrading the ERP system. Enhancing the United States Mint’s Internet operations

was also included in the plan. Progress was made on the first two items. A review of 

business priorities led the Mint to postpone action on the ERP upgrade while it focused its

resources on other challenges.

Equipment and facility improvements enabled the United States Mint to better control

and reduce production cost, maintain quality of product while improving overall equipment effectiveness, provide safe working conditions for United State Mint employees, and

increase employee productivity. It also enabled the United States Mint to maintain 

production capacity by replacing worn equipment with new equipment to ensure that our

factories can operate without interruption.

The United States Mint will now be upgrading the ERP system to a web-based platform

at a later date to facilitate e-government initiatives that support government-to-government and government-to-business interactive processing.

Also in the plan, the Internet will enable the United States Mint to accomplish initiatives such as supply chain management, which will include paperless transactions with

suppliers. The Mint will further capitalize on the Internet’s intrinsic connectivity and

expand the ordering, tracking and fulfillment choices now available to our customers. 

23

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
DOUBLE EAGLE GOLD COIN AUCTION

The United States Mint has struck gold coins in various denominations since 1795. The

first $20 Double Eagle coin was minted in 1849. After the 1933 Double Eagle was struck,

President Franklin Delano Roosevelt took the United States off the gold standard. The

newly minted but never-issued gold coins were destroyed because they were not legal 

tender. The recently auctioned coin is one of only a few 1933 Double Eagles to have

survived destruction. Two were given to the Smithsonian Institution for historic safekeeping. Several others — all of which were stolen — were believed to be either spirited

away or smuggled out of the United States. One of these coins reappeared in 1996 when

a British coin dealer tried selling it to undercover Secret Service agents in New York. An

out-of-court settlement between the Justice Department and the dealer in 2001 set the

stage for the auction. 

The coin, auctioned by Sotheby ’s in New Yo rk City, p receding the A m e ri c a n

Numismatic Association annual convention, sold for $6.6 million to an anonymous bidder. An additional 15 percent auction fee brought the sales price to $7.59 million and an

additional $20 was needed to “monetize” the face value of the coin so it would be legal to

own, bringing the final sales price to $7,590,020. It is believed to be the most ever paid

for a coin at auction. 

The United States Mint’s Public Enterprise Fund (PEF) received the entire amount. The

PEF then disbursed a portion to Sotheby’s to pay for the services it rendered to the Mint

in marketing and auctioning the coin. The PEF also deducted the Mint’s expenses in

administering the contract and protecting the coin. Half the proceeds were retained under

an out-of-court settlement — slightly more than $3 million, which was transferred to the

United States Treasury as a miscellaneous receipt.

TRANSFERS OF PROFITS TO THE TREASURY GENERAL FUND

In FY02, contributions to the Treasury General Fund were $1,030 million. This total

was comprised of $990 million off-budget (from Circulating operations) and $40 million

on-budget (from Numismatic operations). In comparison, $1,283 million off-budget and

$100 million on-budget dollars were transferred in FY01.

24

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

TRANSFER TO THE GENERAL FUND

Thousands
PERFORMANCE MEASURES

One of the most effective means of determining how well a business is doing is through

the use of performance measures. As described in Sections 4 and 5 of the Government

Performance & Results Act (GPRA), agencies are to identify critical activities,devise pertinent performance measures, and report on these activities to the President and Congress.

The Mint originally devised the following list of measures to meet internal and external

reporting requirements. However, a new set of measures believed to be more representative of our actual performance has been designed and will replace these in our discussion

for FY03. A brief description of the FY03 measures is at the end of the Performance

Measures section. The measures we are reporting on for FY02 are:

• Fre q u e n cy of time meeting a minimu m , seasonal-adjusted inve n t o ry leve l,

• Federal Reserve Board Customer Satisfaction Survey results,

• Conversion cost to produce 1000 coin equivalents,

• American Customer Satisfaction Index,

• Percentage of commemorative orders shipped within standard,

• Percentage of recurring orders shipped within standard,

• Numismatic profit margin for bullion,

• Numismatic profit margin for non-bullion, and

• Dollar losses of Reserve Value.

FREQUENCY OF TIME MEETING A MINIMUM, SEASONAL-ADJUSTED 

INVENTORY LEVEL

The Mint met the target inventory levels 72 percent of the time during FY02.

Previously, in both FY00 and FY01, the Mint achieved 100 percent compliance with this

measure.

Quarter, half, and dollar coin inventories have been at or above target 100 percent of the

time. Penny, nickel, and dime inventories have had periods when they did not meet 

targeted levels. As of the end of September, all denominations were at or above target

inventory levels.

Frequency of time meeting target inventory levels

Fiscal Year Percentages

FY00 100%

FY01 100%

FY02 72%

25

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
FEDERAL RESERVE BOARD (FRB) CUSTOMER SATISFACTION SURVEY RESULTS

The Mint’s target of 85 percent was passed in FY99 (91 percent), missed in FY00 (83

percent), and met in FY01 (87 percent). The FY02 survey is currently being conducted.

The FRB Customer Sat i s faction Survey is an annual survey that allows our customer fo r

c i rc u l ating coinage to rate our perfo rm a n c e. This survey is distri buted to the inve n t o ry

m a n age rs at the district and bra n ch banks in the FRB system. It is administered and 

a n a ly zed by a third party office within the Mint that is not re s p o n s i ble for the distri bu t i o n

of coin to the FRB. The survey, in addition to rating the perfo rm a n c e, also provides a

forum for feedback such as the development and implementation of a secure Internetbased Pallet Tracking Inventory System in FY02. This system has transformed pallet

tracking, which was once a burdensome activity, into an easier and better process that

benefits both the Mint and FRB.

CONVERSION COST TO PRODUCE 1,000 COIN EQUIVALENTS

A major indicator of the United States Mint’s success is the conversion cost per 1,000

coin equivalents for the circulating coinage. Since different coin denominations use 

different amounts of resources, this measure compares the resources used in our production indexed to the production levels of one denomination, the quarter. Comparisons

between coin equivalents facilitate product mix changes.

By 2005, the Mint’s goal is to reduce the contro l l able cost of circ u l ating coinage by 15

p e rcent (ex cluding metal costs). The Mint’s FY02 result of $11.50 missed the target of

$8.97 and gre at ly exceeded the FY01 amount of $8.33. The high result is caused by the

l ow demand together with the suspension of production at Philadelphia from March 4 to

Ap ril 18. As noted prev i o u s ly, the production was suspended to ensure that all safety 

c o n c e rns cited in a rep o rt by OSHA had been add re s s e d.

AMERICAN CUSTOMER SATISFACTION INDEX

The Mint has a target of 85, which was exceeded in FY01 (88). The results for FY02

are expected in December 2002.

The American Customer Satisfaction Index (ACSI) is a survey performed annually by

University of Michigan Business School’s National Quality Research center. The ACSI is

conducted for many private sector companies as well as other government agencies. This

allows comparison of our customer satisfaction index score to the best private sector performers in the retail and manufacturing sectors. Benchmarking Mint performance against

private sector companies is important to us, since we produce the numismatic coins and

sell them directly to the public. The Mint results ranged from 84 to 86 during 1995 to

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U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
2000, the index surged to a high of 88 in 2001. These results represent a very high level

of customer satisfaction as shown by similar ratings for high ranking companies such as

DaimlerChrysler AG (Mercedes Benz), the Maytag Corporation, and the H.J. Heinz

C o m p a ny. For more info rm ation on the AC S I , please visit their web-site at

http://www.theacsi.org/.

PERCENTAGE OF COMMEMORATIVE ORDERS SHIPPED WITHIN STANDARD

The Mint’s FY02 score of 95 percent missed the targeted 98 percent. However, we have

markedly improved over both FY01 (89 percent) and FY00 (87 percent).

The Mint shipped 95 percent of commemorative coin orders within the four week 

standard. The Mint implemented a new online catalog, a new centralized pick and pack

product distribution facility, and a new integrated customer relationship management 

system in the fourth quarter of FY01 to better serve our customers. Performance early in

FY02 was impacted by problems experienced during this major implementation. The

Mint, however, improved performance throughout the year and nearly achieved the target

of 98% commemorative orders shipped within four weeks. The Mint will continue to

focus on improving service to customers. Efforts to improve efficiency by improving

forecasting and production planning and tracking yield, cycle time, and inventory turnover

will result in a more nimble Mint with the ability to quickly serve our customers.

Commemorative orders shipped within standar d

Fiscal Year Percentages

FY00 87%

FY01 89%

FY02 95%

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U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T
PERCENTAGE OF RECURRING ORDERS SHIPPED WITHIN STANDARD

The Mint shipped 88 percent of recurring coin orders within the three week standard.

The Mint implemented a new online catalog, a new centralized pick and pack product 

distribution facility, and a new integrated customer relationship management system in the

fourth quarter of FY01 to better serve our customers. Performance early in FY02 was

impacted by problems resulting from this major implementation. The Mint, however,

improved performance throughout the year. While performance did not meet the target of

98 percent, it did improve from 85 percent in FY01. The Mint will continue to focus on

improving service to customers. Efforts to improve efficiency by improving forecasting

and production planning and tracking yield, cycle time, and inventory turnover will result

in a more nimble Mint with the ability to quickly serve our customers.

Recurring orders shipped within standar d

Fiscal Year Percentages

FY00 90%

FY01 85%

FY02 88%

NUMISMATIC PROFIT MARGIN FOR BULLION

Numismatic operations generated a three percent profit margin in FY02, which

exceeded the two percent target. This is an improvement over both FY01 (-0.2 percent)

and FY00 (1.9 percent).

Bullion Profit Margin

Fiscal Year Percentages

FY00 1.9%

FY01 -0.2%

FY02 3.0%

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NUMISMATIC PROFIT MARGIN FOR NON-BULLION

Non-bullion operations produced a 22 percent profit margin in FY02, greater than 

the 15 percent target. However, this is weaker than both FY01 (24 percent) and FY00 

(32 percent). The forces that led to this have been previously discussed.

Non-bullion Profit Margin

Fiscal Year Percentages

FY00 32.0%

FY01 24.0%

FY02 22.0%

DOLLAR LOSSES OF RESERVE VALUE

The Mint’s goal of eliminating losses of Treasury owned bullion reserves was achieved

in FY02. No losses occurred in the last three fiscal years.

FUTURE STRATEGIC GOALS AND MEASURES

As mentioned, the United States Mint is planning to set the stage for improved 

performance through a new strategic plan and new bureau-wide strategic performance

measures described below. The United States Mint has developed a new strategic plan and

is looking forward to feedback from our stakeholders to ensure a quality plan. The new

plan encourages improvement in all areas of operation, from production to administration,

by setting targets for bureau-wide strategic performance measures. Success at the United

States Mint will be shown if we can make, sell, and protect our coinage with:

• Lower lost time accident rates,

• A wo rk env i ronment that re flects our values of honesty, i n t egrity and accountab i l i t y,

• Less cycle-time for materials to run through our production processes,

• Higher yield of good products as the result of our production process,

• Higher availability of our machines to run when they are needed,

• Higher turnover of our inventories,

• L ower conve rsion costs per 1,000 coin equivalents re flecting all products that 

we make,

• Adequate levels of selling, general and administrative (SG&A) expenses,

• Satisfied customers getting the right product at the right time, and

• Balance between the level of readiness and physical security when compared to the

level of threat.

As we improve on these bureau-wide strategic performance measures, the American

public will benefit as our efficiency improves.

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UNITED STATES MINT FMFIA / FFMIA ANNUAL ASSURANCE STATEMENT

FOR FISCAL YEAR 2002

The United States Mint has evaluated its systems of management control for the 

fiscal year ending September 30, 2002, in accordance with procedures and standards 

prescribed by the Office of Management and Budget and the General Accounting Office.

The Mint provides reasonable assurance that the objectives of Section 2 of the

FMFIA were achieved during fiscal year (FY) 2002. 

For FY 2002, the Mint provides reasonable assurance that the objectives of Section 4

of the FMFIA were met, with the exception of material weaknesses related to information

system controls. We took decisive action throughout FY 2002 to correct two material

weaknesses reported in our FY 2001 Annual Assurance Statement, including the issuance

of Mint-wide information security policies, defining and enforcing stringent system

access roles, strengthening security access controls, and performing enhanced reviews of

system vulnerabilities. However, because certain conditions contributing to these weaknesses existed during most of FY 2002, and additional related conditions were identified

during the FY 2002 audit, we are reporting one material weakness related to information

system controls. Because these conditions were present for much of FY 2002, we

acknowledge that material weaknesses existed for the fiscal year. However, we believe the

actions taken effectively mitigate these material weaknesses.

For FY 2002, we have also identified several second tier issues. First, the Mint needs

to improve controls in the following areas: review and acceptance of vendor invoices for

payment; establishment and maintenance of vendors in the systems master vendor files;

the review process for submitting payroll data; purchase card procedures; and, inventory

temporarily held by outside parties.

The next second tier issue is that the Mint had no systems certified and accredited as

of September 30, 2002. The Mint completed an Interim Approval to Operate for each of

its field sites in February 2002, and intends to achieve certification and accreditation for

all systems by the end of FY 2003. The final second tier issue is that the Mint needs to

implement systemic business process controls for its e-commerce systems.

In all of its program activities, the Mint is actively engaged in developing and implementing management controls designed to support designated program results, consistent

use of resources, elimination of program waste, fraud and mismanagement, adherence to

laws and regulations, decrease improper or erroneous payments, and ensure reliable 

performance information. During FY 2003, the Mint intends to correct the three second

tier weaknesses identified above, and has begun implementing corrective actions or has

plans in place for doing so. The Mint also is in the final stages of completing the required

Continuity of Operations (COOP) Plan. The Mint’s performance information is reliable

as most of it comes directly from the enterprise resource planning system.

The material weaknesses dealing with information systems as noted above existed

throughout most of FY 2002. Therefore, the Mint cannot provide reasonable assurance

that it was in substantial compliance with requirements of the Federal Financial

Management Improvement Act of 1996 (FFMIA) for FY 2002. 

Henrietta Holsman Fore

Director 

United States Mint

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Uncirculated Coin Set

The annual United States

Mint Uncirculated Coin

Set®is the staple of the

serious collector of

United States coins.

5-Coin Proof

The annual United States Mint 50

State Quarters Proof SetTM features

the five quarters honoring different

states each year.

Silver Proof

The annual United States Mint Silver

Proof SetTM features proof versions of all

circulating coins. The five quarters, dime

and half dollar are struck in 90% silver,

also known as “coin silver”.

10-Coin Proof

The annual

United States Mint Proof Set®is the United States

Mint's best-selling numismatic coin product.
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American Eagle Gold Proof Coin

American Eagle Gold Proof Coins,

issued annually, are packaged in

rich blue velvet and white satin

presentation cases. Pictured here

are the four-coin set and the oneounce coin.

American Eagle Silver Proof Coin

The classic American Eagle Silver Proof Coin,

issued annually, is presented in a white satin

and blue velvet presentation case.

American Eagle Platinum 

Proof Coin

Dramatic black velvet and

white satin presentation

cases highlight the

United States Mint’s

premier annual product, American Eagle

Platinum Proof Coins

(pictured here with

the Certificate of

Authenticity) in the

four-coin set and 

one-ounce coin. 
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The 50 State Quarters

® & Euro Coin Collection

The 50 State Quarters

® & Euro Coin Collection is

a unique collection representing each of the 12

original participating European Union member nations, along with the 2002 uncirculated quarters from the United States

Mint 50 State Quarters

® Program –

with the (D) Denver mint mark. 

Commemorative Coins

The United States Mint produces limited edition, non-circulating

modern commemorative coins. They are authorized by

Congress through enabling legislation and are designed to

celebrate and honor American people, places, events and

institutions. Modern commemoratives are typically

produced in gold, silver or clad. Surcharges raised

from the sale of the United States Mint’s modern

commemorative coin programs are designated for

specific purpose.

U.S. Military Academy

Commemorative Coins
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2002 Winter Olympic Commemorative Coins
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DEPARTMENT OF THE TREASURY

UNITED STATES MINT

STATEMENTS OF FINANCIAL POSITION (in thousands)

Years Ended September 30,

2002 2001

ASSETS

Current assets

Fund balances with Treasury and cash (Note 3) $ 301,067 $ 278,180 

Accounts receivable, net (Note 4) 17,956 7,508 

Operating inventories, net (Note 5) 336,194 465,804 

Advances and prepayments (Note 6) 4,677 6,712 

Total current assets $ 659,894 $ 758,204 

Non-current assets

Property, plant and equipment, net (Note 7) $ 313,501 $ 326,548 

Other assets (Note 8) 12,744 5,146 

Total non-current assets $ 326,245 $ 331,694 

TOTAL ASSETS $ 986,139 $ 1,089,898

LIABILITIES AND NET POSITION

Liabilities:

Current liabilities

Accounts payable - Federal (Note 9) $ 2,985 $ 5,216 

Accounts payable - Non-Federal 27,900 30,758 

Surcharges payable 8,396 10,816 

Unearned revenue 1,747 2,730 

Accrued salaries and benefits/unemployment insurance 4,120 9,751 

Total current liabilities $ 45,148 $ 59,271 

Non-current liabilities

Accounts payable - Federal (Note 9) $ 163,959 $ 154,585 

Accrued workers' compensation benefits 36,486 34,635 

Accrued annual leave 8,960 9,106 

Other liabilities - -

Total non-current liabilities $ 209,405 $ 198,326 

TOTAL LIABILITIES $ 254,553 $ 257,597 

NET POSITION

Fund balance $ 731,586 $ 832,301 

TOTAL LIABILITIES AND NET POSITION $ 986,139 $ 1,089,898 

CUSTODIAL GOLD AND SILVER RESERVES

United States' gold and silver reserves (Note 10) $10,364,687 $10,364,687 

Custodial liability to Treasury (Note 10) 10,364,687 10,364,687 

NET CUSTODIAL POSITION $ 0 $ 0 

The accompanying notes are an integral part of these statements.
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DEPARTMENT OF THE TREASURY

UNITED STATES MINT

STATEMENTS OF OPERATIONS AND CHANGES IN NET POSITION (in thousands)

Years Ended September 30,

2002 2001

REVENUES

Circulating coinage revenue $ 1,364,176 $ 2,021,344 

Sales to the public (numismatic sales) 447,756 410,679 

Surcharges collected for beneficiary organizations (Note 11) (7,741) (8,653)

TOTAL REVENUES $ 1,804,191 $ 2,423,370 

COSTS AND EXPENSES

Cost of goods sold (Note 12) $ 630,395 $ 710,421 

Selling, general and administrative expenses (Note 13) 204,646 203,751 

Other costs and expenses (Note 14) 8,033 9,009 

TOTAL COSTS AND EXPENSES $ 843,074 $ 923,181 

FINANCING SOURCES AND COSTS NOT ASSIGNED TO PROGRAMS

Imputed financing (Note 15) $ 8,854 $ 9,139 

Less: Additional employee benefit expenses (Note 15) (8,854) (9,139)

TOTAL FINANCING SOURCES AND COSTS 

NOT ASSIGNED TO PROGRAMS $ 0 $ 0 

Excess of revenues over total costs and expenses

and financing sources, before protection activity $ 961,117 $ 1,500,189

Protection revenue 8 46 

Protection costs (31,840) (34,325)

TOTAL PROTECTION ACTIVITY ($ 31,832) ($ 34,279)

Excess of revenues over total costs and expenses and 

financing sources $ 929,285 $ 1,465,910 

Net position, beginning of year 832,301 749,391 

Transfers to Treasury's General Fund (1,030,000) (1,383,000)

NET POSITION, END OF YEAR $ 731,586 $ 832,301 

The accompanying notes are an integral part of these statements.
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DEPARTMENT OF THE TREASURY

UNITED STATES MINT

STATEMENTS OF CASH FLOWS (in thousands)

Years Ended September 30,

2002 2001

CASH FLOWS FROM OPERATING ACTIVITIES:

Excess of revenues over total costs and expenses

and financing sources $ 929,285 $ 1,465,910 

Adjustments affecting operating cash flows:

Decrease (Increase) in accounts receivable ($ 10,448) ($ 4,977)

Decrease (Increase) in other assets 124,047 (1,570)

Increase (Decrease) in accounts payable 4,285 (33,665)

Increase (Decrease) in other liabilities (7,329) (2,013)

Increase (Decrease) in accumulated depreciation and amortization 34,815 13,759 

Total adjustments $ 145,370 ($ 28,466)

NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,074,655 $ 1,437,444 

CASH FLOWS FROM INVESTING ACTIVITIES:

Increase (Decrease) in property, plant and equipment ($ 21,768) ($ 115,672)

NET CASH USED BY INVESTING ACTIVITIES ($ 21,768) ($ 115,672)

CASH FLOWS FROM FINANCING ACTIVITIES

Funds transferred to Treasury ($1,030,000) ($1,383,000)

NET CASH USED BY FINANCING ACTIVITIES ($1,030,000) ($1,383,000)

NET CASH PROVIDED (USED) BY OPERATING, 

INVESTING AND FINANCING ACTIVITIES $ 22,887 ($ 61,228)

FUND BALANCES WITH TREASURY AND CASH 

AT BEGINNING OF YEAR 278,180 339,408 

FUND BALANCES WITH TREASURY AND CASH 

AT END OF YEAR $ 301,067 $ 278,180 

The accompanying notes are an integral part of these statements.
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DEPARTMENT OF THE TREASURY

UNITED STATES MINT

NOTES TO THE FINANCIAL STATEMENTS

FOR FISCAL YEAR ENDED SEPTEMBER 30, 2002

(Dollars are in thousands except Fine Troy Ounce information)

Note 1 Reporting Entity

Established in 1792, the United States Mint is an integral part of the Department of

the 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 beneficiary 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 United States’gold and silver metal reserves. These custodial reserves are often

referred to as “deep storage” and are reported in the custodial segment of the Statement of

Financial Position.

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 of the United States Mint’s Public Enterprise Fund (PEF).

Pursuant to Public Law (P.L.) 104-52, 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 used in circulating coin production, the cost of metals (gold, silver, platinum,

cupro-nickel, magnesium and zinc) used in numismatic coin production, fabrication and

transportation costs for metals used in circulating coinage and numismatic products, and

costs of transporting circulating coinage between Mint production facilities and Federal

Reserve banks. Other costs/expenses accounted for in this fund include costs related to

research and development and purchases of equipment, as well as capital improvements.

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.

Treasury’s Bullion Fund (Bullion Fund) is used to account for United States gold and

silver reserves. A separate Schedule of Custodial Gold and Silver Reserves has been 

prepared for that portion of the Treasury gold and silver reserves for which the United

States Mint acts as custodian.
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U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

Note 2 Summary of Significant Accounting Policies

Basis of Presentation

The United States Mint has histori c a l ly prep a red its financial statements in 

accordance with accounting principles generally accepted in the United States of America

(U.S.), based on accounting standards issued by the Financial Accounting Standards

Board (FASB), the private-sector standards-setting body. In October 1999, the Federal

Accounting Standards Advisory Board (FASAB) was designated by the American

Institute of Certified Public Accountants (AICPA) as the standards-setting body for financial statements of federal government entities with respect to the establishment of

accounting principles generally accepted in the U.S. FASAB has indicated, however, that

financial statements prepared based upon accounting standards published by the FASB

may also be regarded as in accordance with accounting principles generally accepted in

the U.S. for those federal entities, such as the United States Mint, that have issued financial statements based upon FASB accounting standards in the past. Accordingly, consistent with historical reporting, the United States Mint’s financial statements are presented

in accordance with accounting standards promulgated by the FASB.

Basis of Accounting

The accompanying financial statements have been prep a red on the accrual basis of

a c c o u n t i n g. Under the accrual method, reve nues are re c og n i zed when earned and ex p e n s e s

a re re c og n i zed when a liability is incurre d, without rega rd to receipt or payment of cash. A l l

i n t ra-Mint transactions and balances have been eliminat e d.

Revenues

Circulating Coinage: P.L. 104-52, establishing the PEF, provides for the sale of 

circulating coinage at face value to the Federal Reserve System. Revenue from circulating coinage is recognized when the product is shipped to the Federal Reserve Banks.

Numismatic Sales: Revenue is recognized when products are shipped to customers.

Prices for numismatic products are based on the product cost plus a reasonable profit.

Bullion products are priced based on the market price of the precious metals plus a 

market premium.

Unearned Revenues: These are amounts received from customers for which the

numismatic products have not been shipped.

Fund Balances with Treasury

All cash is maintained at the Treasury.
40

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Operating Inventories

Inventories of circulating coinage and most numismatic products are valued at the

lower of cost or market value, with cost being determined by the average cost method.

Absent historical cost records to determine acquisition cost of the gold and silver over the

decades, the statutory rates of $42.2222 per fine troy ounce (FTO) of gold and

$1.292929292 per FTO of silver are used. All work-in-process gold and silver inventories

have been included in the United States Mint’s financial statements.

Advances

Payments in advance of the receipt of goods and services are recorded as 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:

ADP Software 2 to 10 years

Machinery and Equipment 7 to 20 years

Structures, Facilities, and Leasehold Improvements 10 to 20 years

Depreciation of plant and equipment assets used jointly in numismatic and circulating coinage production is allocated to each activity based on usage percentages.

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

or the remaining useful life of the asset and depreciated on the straight-line method, while

maintenance and repair costs are charged to expense as incurred.

Surcharges

Legislation authorizing commemorative programs often requires that the PEF remit a

portion of the sales proceeds to beneficiary organizations. These amounts are defined as

“surcharges.” A surcharges payable is established for surcharges received but not yet paid

to the beneficiary.

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

became law on September 28, 1996 and changed the requirements of paying surcharges

for commemorative coin programs. Prior to the Act, any surcharges received were to be
41

U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

restricted to the benefiting organization. However, the Act made the benefiting organizations full partners in bearing costs, risks, and marketplace realities of selling coins.

B e n e fiting orga n i z ations cannot re c e ive surch a rge payments unless all of the United Stat e s

M i n t ’s operating costs of the coin program are fully re c ove re d. The United States Mint

m ay make interim surch a rge payments during a commemorat ive program if the benefi t i n g

o rga n i z ation meets the eligibility cri t e ria in the A c t , if the pro fi t ability of the program is

d e t e rm i n abl e, and if the United States Mint is assured it is not at risk of a loss.

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

A liability is recorded for estimated future payments to be made for workers compensation pursuant to the Federal Employees' Compensation Act (FECA). The liability is

based on the net present value of estimated future payments. Estimated future payments

to be made by the Treasury are calculated by the Department of Labor, which tracks and

pays the claims and is subsequently reimbursed by the Treasury. A portion of Treasury's

liability is allocated to the United States Mint based on prior claims payment experience.

Displays and Archives

The United States Mint has a display area at each of its facilities and maintains

archives at its headquarters in Washington, D.C. The displays and archives include 

valuable coins and commemoratives minted domestically and internationally and other

artifacts related to minting operations. These items are not included in balances reported

in these financial statements. Records are maintained of all coins, commemoratives, and

valuable artifacts. Physical inspections are performed to assure accountability.

Protection Costs

Virtually all of the Treasury’s gold and silver reserves are held by the United States

Mint, which is responsible for safeguarding the reserves in its custody. These costs are

borne by the United States Mint, but are not directly related to the circulating or numismatic coining operations of the United States Mint. Organizationally, the Protection

Strategic Business Unit is a separate line of business from coining operations.

Reclassification

Certain FY 2001 balances have been reclassified to conform to the presentation in 

FY 2002.
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Hedging

For FY 2002, the United States Mint is in compliance with Statement of Financial

Accounting Standards No. 133, as amended, and follows the accounting guidelines for

“ cash flow” hedging. Cash flows (gains or losses) generated from the United States

Mint’s hedging activities are accounted for in the Statement of Operations during the

accounting period in which the hedges are resolved. Gains and losses generated from

hedging activities in FY 2002 are not material. During FY 2002, the United States Mint

closed out existing hedge commitments and did not enter into any new commitments.

Note 3 Fund Balances with Treasury and Cash

Components of Fund Balances with Treasury and Cash at September 30 are as follows:

2002 2001

Revolving fund $301,067 $278,176 

Imprest fund 0 4

Total fund balance with Treasury and cash $301,067 $278,180 

At September 30, 2002 and 2001, revolving fund balances included $ 8.40 million

and $10.82 million, respectively, in restricted amounts for possible payment of surcharges

to beneficiary organizations. Revolving fund balances also include amounts in budgetary

clearing accounts.

Note 4 Accounts Receivable

Components of accounts receivable at September 30 are as follows:

2002 2001

Accounts receivable, Federal $ 0 $ 192 

Accounts receivable, Non-Federal 18,563 7,742 

Less allowance for doubtful accounts (607) (426)

Total Accounts Receivable $ 17,956 $ 7,508 

Beginning in FY 1997, an allowance for uncollectible customer accounts receivable

was established for all accounts that are delinquent more than 90 days. However, the

United States Mint will continue collection action as specified by the Debt Collection

Improvement Act of 1996.
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Note 5 Operating Inventories

The components of operating inventories at September 30 are summarized below:

2002 2001

Operating components $313,509 $451,380 

Supplies 23,175 24,531 

Allowance for program closeout (490) (10,107)

Total Operating Inventories $336,194 $465,804 

Operating components of inventories include direct materials, direct labor, and overhead for work-in-process and finished goods inventories. Direct materials consist of 

metals, fabrication costs, and transportation-in costs (costs related to the shipment of 

metals from fabricators and between Mint facilities). Direct labor consists of direct 

factory labor costs, and overhead consists of indirect labor costs, indirect materials

(including dies), utilities, and depreciation. Costs of precious metals (without fabrication

and transportation) in the operating components at September 30 are as follows:

2002 2001

Gold ($42.2222/oz.) $118,681 $121,065 

Silver ($1.292929292/oz.) 17,740 32,139 

Platinum (Lower of cost or market) 40,483 48,907 

Total cost of precious metals in operating component $176,904 $202,111 

Note 6 Advances and Prepayments

The components of Advances and Prepayments at September 30 are summarized below:

2002 2001

Advances 

Federal: $ 4,587 $ 6,553 

Non-Federal: 90 159 

Total Advances $ 4,677 $ 6,712 

A dva n c e s - Fe d e ral is the amount the United States Mint pays into the Tre a s u ry

Wo rking Capital Fund (the Fund), a revolving fund that operates as an accounting entity.

In the Fund, the assets are cap i t a l i zed and all income is in the fo rm of offsetting collections

d e rived from each of the Tre a s u ry bu reaus and ava i l able to finance the Fund’s operat i o n s .

A dva n c e s - N o n - Fe d e ral consists pri m a ri ly of advances to employees for travel.
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Note 7 Property, Plant and Equipment

Components of Property, Plant and Equipment at September 30 are as follows:

2002 2001

Land $ 2,529 $ 2,529 

Structure, Facilities and Leasehold Improvements 169,739 154,753 

Computer Equipment 21,668 17,572 

ADP Software 89,597 74,259 

Machinery and Equipment 211,720 224,372 

Assets Under Capital Lease 0 0

$ 495,253 $ 473,485 

Less Accumulated Depreciation and Amortization (181,752) (146,937)

Total Property, Plant and Equipment, Net $ 313,501 $ 326,548 

United States Mint facilities used to manu fa c t u re circ u l ating coinage and nu m i s m at i c

p roducts are owned by the United States Mint and located in San Fra n c i s c o , C a l i fo rn i a ;

P h i l a d e l p h i a , Pe n n s y l vania; Denve r, C o l o rado; and West Po i n t , N ew Yo rk. In add i t i o n , t h e

United States Mint owns the land and buildings at the Fo rt Knox Bullion Dep o s i t o ry in

Ke n t u cky.

Depreciation and amortization expense charged to operations for FY 2002 and FY

2001 were $44.20 million and $29.54 million, respectively.

Note 8 Other Assets

In cluded in other assets are progress payments (advances) for equipment and bu i l d i n g

i m p rovements under construction. The United States Mint initiated a Mint-wide securi t y

u p gra d e, wh i ch re q u i res progress payments be made to the construction contra c t o rs . As of

September 30, 2002 the cumulative balance for such payments is $8.18 million.

Note 9 Accounts Payable – Federal

Effective FY 2000, Treasury’s working stock of gold and silver used in numismatic

coin production is recorded in the accounts of the Public Enterprise Fund and is not

included in the Schedule of Custodial Gold and Silver Reserves. The major portion of the

non-current Accounts Payable-Federal is the non-custodial gold and silver used as working stock for numismatic coin production.
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U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

A summary of Accounts Payable-Federal at September 30 are as follows:

2002 2001

Current:

Funds to be transferred to others $ 2,985 $ 5,216 

$ 2,985 $ 5,216 

Non-Current:

Metal used as working stock inventory $163,959 $154,585 

$163,959 $154,585 

Total Accounts Payable - Federal $166,944 $159,801 

The funds to be transferred to others resulted from the sale of metal used in Mint

products and other amounts owed to Federal entities, primarily the Treasury.

Note 10 Custodial Gold and Silver Reserves

The United States Mint is responsible for safeguarding much of the nation’s precious

metals and is the custodian of virtually all of the United States' gold and silver reserves.

These resources are reported in the custodial segment of the Statement of Financial

Position at the lower of cost or market value. Absent historical cost records to determine

the acquisition cost of the gold and silver over the decades,statutory rates of $42.2222 per

FTO of gold and $1.292929292 per FTO of silver are used to value the entire custodial

reserves held by the United States Mint. An offsetting custodial liability is also reported

for these assets. For purposes of comparison, the market value of these assets is disclosed

in this note.

Amounts and values of custodial gold and silver in the custody of the Mint at September

30 are as follow:

2002 2001

Gold:

Inventories (FTO) 245,262,897 245,262,897 

Market Value ($ per FTO) $ 323.70 $ 293.10 

Market Value ($ in thousands) $79,391,600 $71,886,555 

Statutory Value ($ in thousands) $10,355,539 $10,355,539 

Silver:

Inventories (FTO) 7,075,171 7,075,171 

Market Value ($ per FTO) $ 4.5325 $ 4.5825 

Market Value ($ in thousands) $ 32,068 $ 32,422 

Statutory Value ($ in thousands) $ 9,148 $ 9,148 

Total Market Value of Custodial Gold and

Silver Reserves ($ in thousands) $79,423,668 $71,918,977 

Total Statutory Value of Custodial Gold and

Silver Reserves ($ in thousands) $10,364,687 $10,364,687 
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Note 11 Surcharges Collected

The following chart shows surcharges collected by product and beneficiary organization

for FY 2002 and FY 2001. The surcharge recipients of programs subject to the provisions

of P.L. 104-208 must meet certain requirements before the United States Mint can make

surcharge payments. These requirements include raising matching funds and providing

audited financial statements.

Commemorative Program Beneficiary Organization 2002 2001 Sales Period

American Buffalo Coin National Museum of the American Indian $ 38 $4,962 2001-2002 

Capitol Visitor Center Capitol Preservation Fund 545 2,982 2001-2002 

US Military Academy Association of Graduates 3,639 0 2002-2003 

US Military Academy

2002 Winter Olympic Salt Lake Organizing Committee 3,518 0 2002 

U.S. Olympic Committee

Library of Congress Library of Congress 0 246 2000-2001 

Trust Fund Board

Yosemite Medal National Park Foundation 1 0 open ended 

Leif Ericson Liefur Eiriksson Foundation 0 463 2000-2001 

Total Surcharges Collected $7,741 $8,653 

Note 12 Cost of Goods Sold

Components of Cost of Goods Sold as of September 30 are as follows:

2002 2001

Finished Goods, Beginning $ 74,880 $ 61,601 

Cost of Goods Manufactured:

Work-In-Process, Beginning $ 390,924 $ 247,835 

Direct Labor 11,703 19,134 

Manufacturing Overhead 491,179 847,655 

Work-In-Process, Ending (262,354) (390,924)

Total Cost of Goods Manufactured $ 631,452 $ 723,700

Cost of Goods Available for Sale $ 706,332 $ 785,301

Finished Goods, Ending (75,937) (74,880)

Total Cost of Goods Sold $ 630,395 $ 710,421 
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Note 13 Selling, General and Administrative Expense

Following are components of selling, general and administrative expenses as of

September 30:

2002 2001

Selling expenses:

Marketing $ 51,358 $ 35,864 

Advertising (including postage to mail brochures) 6,710 7,602 

Advertising for coin awareness 5,424 19,726 

Transportation to Federal Reserve Banks (FRB) 4,977 6,765 

$ 68,469 $ 69,957 

General and administrative:

Labor/Benefits/Benefits to Former Personnel $ 43,255 $ 38,503 

Non-Capitalized Equipment 1,659 1,908 

Travel/Transportation 861 4,850 

Supplies 1,628 2,960 

Depreciation 10,102 9,949 

Rent/Communications/Utilities less Postage Mail Drop 17,806 14,995 

Printing less Other Print/Report/Advertising 96 297 

Services less Product Advertising 60,762 60,306 

Insurance Claims/Interest & Dividends 8 26 

$136,177 $133,794 

Total Selling, General and Administrative $204,646 $203,751 

Note 14 Other Costs and Expenses

These consist primarily of returns of mutilated or uncurrent coins to the United States

Mint. The United States Mint reimburses the entity that sent in the coins for 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.

Note 15 Retirement Plans and Other Postemployment Costs (Imputed Financing)

At the end of FY 2002, five hundred twelve (512) Mint employees participated in the

Civil Service Retirement System (CSRS), to which the United States Mint contributes

24.2 percent of 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 had the option to join FERS or remain in CSRS.

A pri m a ry fe at u re of FERS is that it offe rs a savings plan to wh i ch the United Stat e s

Mint automat i c a l ly contri butes one percent of pay and mat ches any employee contri bu t i o n s

up to an additional four percent of pay. FERS employees are allowed a maximum annu a l
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c o n t ri bution of 12 percent of salary to a maximum of $11,000. Employees part i c i p ating in

FERS are cove red by the Fe d e ral Insurance Contri bution Act (FICA) for wh i ch the United

S t ates Mint contri butes a mat ching amount to the Social Security A d m i n i s t rat i o n .

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 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 24.2

percent of basic pay for CSRS-covered employees and 11.5 percent of basic pay for

FERS-covered employees were in use for both FY 2002 and FY 2001.

The amounts that the PEF contributed to the retirement plans and Social Security

as of September 30 are as follows:

2002 2001

Social Security System $ 7,826 $ 8,502 

Civil Service Retirement System 2,623 2,685 

Federal Employees Retirement System

(Retirement & Thrift Savings Plan) 12,945 12,895 

$23,394 $24,082 

The United States Mint is also recognizing its share of the future cost of postretirement 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 factor relating to health benefits is $3,473 and

$2,999 per employee enrolled in the Federal Employees Health Benefits Program in FY

2002 and FY 2001, 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 FY 2002 and FY 2001.

The amount of Imputed Cost incurred by the Mint for FY 2002 and FY 2001 is as

follows (before the offset for Imputed Financing):

2002 2001

Health Benefits $ 5,885 $ 6,868 

Life Insurance 22 18 

Pension Expense 2,947 2,253 

Total Imputed Cost $ 8,854 $ 9,139 
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Note 16 Lease Commitments

The United States Mint leases space in five buildings in Washington, D.C. and office

and warehouse space near other Mint facilities. Space in Denver and San Francisco is

leased from the General Services Administration (GSA), which charges a fee that approximates the commercial rental rates for similar properties. The remaining buildings are

leased from private sources.

Total rental expense was $17.92 million and $12.66 million in FY02 and FY01,

respectively.

Operating Lease

Schedule of Minimum Future Rental Payments (in thousands)

Year Ended September 30:

2003 $ 16,477 

2004 15,926 

2005 15,416 

2006 15,462 

2007 15,388 

After 2007 122,131 

Total minimum future rental payments $200,800 

Note 17 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 Department of

Treasury Judgment Fund. 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.

The United States Mint has a pending bankruptcy claim for about $13 million against

a silver refining vendor for the not-returned Mint silver. At the same time, the United

States Mint has a pending claim under an insurance policy for the loss of this silver.
Note 18 Related Parties

The United States Mint is subject to management control by the Secretary of the

Treasury.

Related Parties who were paid at least $100,000 as of September 30 are below:

2002 2001

Office of Personnel Management $21,055 $20,883

Department of Labor 11,683 2,318

United States Postal Service 8,846 12,404

Social Security Administration 7,826 8,502

Treasury Departmental Offices 3,899 1,864

General Services Administration 1,144 2,282

Department of Agriculture 624 100

Internal Revenue Service 373 287

General Accounting Office 250 0

Department of the Army 210 149

Federal Law Enforcement Training Center 198 169

Department of Health and Human Services 181 80

Department of Energy 136 9

Department of Veterans Affairs 0 468

Government Printing Office 0 281

Total Related Parties $56,425 $49,796

The United States Mint shipped approximately $1,326 million in coins to the Federal

Reserve Bank in FY02. This amount represents a 33.8 percent decrease from FY01

shipments.

Numismatic orders, checks, and credit card orders are processed by a commercial

bank. Fees associated with these services are absorbed by the Tre a s u ry and are not

reflected in the United States Mint’s financial statements.

Note 19 Executive Compensation

The United States Mint employs one Presidential Appointee and six members of the

Senior Executive Service. The annual salaries range from $125,972 to $138,200. Other

nominal compensation arrangements supplement these salaries.

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SUPPLEMENTAL SCHEDULES OF NET COST

This supplemental section provides additional information related to the financial 

condition of the United States Mint. Office of Management and Budget (OMB) Bulletin

01-09 (Form and Content of Agency Financial Statements) generally requires two additional statements of federal entities – the Statement of Financing and the Statement of

Budgetary Resources. These statements are generally intended for organizations that

operate under an annual appropriation from Congress. However, the United States Mint

is a full revolving fund and receives no appropriated funds. Accordingly, these financial

statements have been prepared in accordance with form and content standards applicable

to commercial activities. Therefore, we do not present either the Statement of Financing

or the Statement of Budgetary Resources as they may mislead the reader.

However, to ensure consistency for reporting at the Department level, we have prepared

the following Supplemental Schedule of Net Cost. The Supplemental Schedules of Net

Cost are modeled primarily on OMB Bulletin 01-09, using proprietary accounting data.

The United States Mint’s three programs are reported separately in the Supplemental

Statements of Net Cost, but are combined in the Statements of Operations and Changes in

Net Position.

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DEPARTMENT OF THE TREASURY

UNITED STATES MINT

SUPPLEMENTAL SCHEDULES OF NET COST (in thousands)

Years Ended September 30,

2002 2001

COSTS:

NUMISMATIC PRODUCTION AND SALES 

Intragovernmental

Selling, General and Administrative $ 33,207 $ 17,822 

Other costs and expenses 885 914 

Total Intragovernmental $ 34,092 $ 18,736 

With the Public

Cost of Goods Sold $ 329,382 $ 298,570 

Selling, General and Administrative 44,147 42,705 

Total With the Public $ 373,529 $ 341,275 

Less earned revenues 440,015 402,027 

NET PROGRAM COSTS (PROFIT) ($ 32,394) ($ 42,016)

CIRCULATING PRODUCTION AND SALES 

Intragovernmental

Selling, General and Administrative $ 14,657 $ 12,615 

Other costs and expenses 7,969 8,225 

Total Intragovernmental $ 22,626 $ 20,840 

With the Public

Cost of Goods Sold $ 301,013 $ 411,852 

Selling, General and Administrative 112,635 130,610 

Other costs and expenses 8,033 9,009 

Total With the Public $ 421,681 $ 551,471 

Less earned revenues 1,364,176 2,021,344 

NET PROGRAM COSTS (PROFIT) (A) ($ 919,869) ($1,449,033)

PROTECTION OF ASSETS (Net of Receipts) $ 31,832 $ 34,279 

NET COST OF (PROFIT FROM) OPERATIONS ($ 920,431) ($1,456,770)

(A) Net Program cost (profit) from circulating production and sales on this statement will not agree with the supplemental schedule for Circulating SBU

Profit and Loss because imputed cost is not included in the supplemental schedule.
GLOSSARY OF TERMS 

AMERICAN EAGLE PROGRAM – Gold, p l at i nu m , or silver coins issued in proof or 

u n c i rc u l at e d qualities. Gold and platinum coins are issued with one-tenth, one-quarter,

one-half and one ounce precious metal content. Silver coins are issued with one ounce of

silver metal content. The proof quality coins are considered numismatic products and are

sold directly to consumers either as individual coins or in various combinations of sizes

and metals. Uncirculated quality coins are considered investment-quality coins and are

sold directly to a limited number of precious metal dealers.

CIRCULATING COINS – the penny, nickel, dime, quarter dollar, half-dollar, and one-dollar

coins used in daily commerce. The Federal Reserve System distributes circulating coins

into the economy.

COMMEMORATIVE COIN PROGRAMS – coins that Congress directs the Mint to produce and

market based on legislation. These programs generally honor significant people (i.e.,

Dolly Madison), events (i.e., the Olympic Games), or things (i.e., the National Law

Enforcement Officers Memorial). Commemorative coins are generally sold for a 12-

month period or as defined in the legislation.

NUMISMATIC PRODUCTS – the coins and coin-related products produced by or for the Mint

for sale to the public. These products are separate from the circulating coins sold to the

Federal Reserve System.

PROOF QUALITY COINS – coins that are struck multiple times with specially treated dies to 

produce a mirrored background, sharp relief, and a frosted image on the finished 

coin. Coins offered as numismatic products are produced in proof quality as well as 

uncirculated quality.

RECURRING OR ANNUAL COIN PROGRAMS – proof and uncirculated quality sets of all circulating coins for a year that are specially packaged for collectors. The uncirculated set

includes coins of each denomination produced at both the Denver and Philadelphia Mints.

The annual and silver proof sets include one of each circ u l ating coin and are produced only

at the San Francisco Mint. The silver proof set includes a silver dime, q u a rter dollar(s), a n d

a half-dollar; the cent, n i cke l , and dollar coins are their normal metal make-up. 

UNCIRCULATED QUALITY COINS – coins that are struck only once with regular coinage dies.

Uncirculated coins have a satin finish versus the mirrored background and frosted image

of the proof coins.

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REPORT OF THE OFFICE OF INSPECTOR GENERAL

THE DEPARTMENT OF THE TREASURY

To the Director of the United States Mint:

We have audited the accompanying Schedule of the Custodial Gold and Silver Reserves

(Custodial Schedule) of the United States Mint (U.S. Mint) as of September 30, 2002 and

2001. This report presents our unqualified opinion on this Custodial Schedule. Our audit

disclosed no material weaknesses and no instances of reportable noncompliance with laws

and regulations in fiscal year 2002. However, we noted a matter involving internal control

and its operation that we have reported to the management of the U. S. Mint in a separate

letter dated October 31, 2002.

Management's Responsibilities

Management is responsible for:

• Preparing the Custodial Schedule in conformity with accounting principles generally accepted in the United States of America.

• Establishing and maintaining internal control. In fulfilling this responsibility,

estimates and judgments by management are required to assess the benefits and

related costs of internal control policies and procedures.

• Complying with laws and regulations applicable to the U.S. Mint’s custodial

responsibilities for the Gold and Silver Reserves.

Scope of 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 applicable provisions of the Office of Management and Budget (OMB) Bulletin No.

01-02, Audit Requirements for Federal Financial Statements. Those standards require

that we plan and perform the audits to obtain reasonable assurance about whether the

Custodial Schedule is free of material misstatement. An audit includes examining, on a

test basis, evidence supporting the amounts and disclosures in the Custodial Schedule. An

audit also includes assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall custodial schedule presentation.

Our responsibility is to express an opinion on the Custodial Schedule based on our audits.

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

In planning and conducting our audit of the U.S. Mint’s Custodial Schedule as of

September 30, 2002, we considered its internal control over financial reporting and 

compliance with laws and regulations. Specifically, we obtained an understanding of the

design of the U.S. Mint’s internal controls, determined whether these internal controls had
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been placed in operation, assessed control risk, and performed tests of controls in order to

determine our auditing procedures for the purpose of expressing our opinion on the

Custodial Schedule and not to provide assurance on the internal control over financial

reporting and compliance with laws and regulations. Consequently, we do not provide an

opinion on such controls.

As part of obtaining reasonable assurance about whether the Custodial Schedule is free

of material misstatement, we performed tests of the U.S. Mint’s compliance with certain

provisions of laws and regulations, noncompliance with which could have a direct and

material effect on the determination of Custodial Schedule amounts as of September 30,

2002, and certain other laws and regulations. We limited our tests of compliance to these

provisions and we did not test compliance with all laws and regulations applicable to the

U. S. Mint. Providing an opinion on compliance with laws and regulations was not an

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

Results of Audits

Opinion on the Custodial Schedule

In our opinion, the accompanying Custodial Schedule presents fairly, in all material

respects, the balance of the United States’Gold and Silver Reserves in the custody of the

U.S. Mint as of September 30, 2002 and 2001, in conformity with accounting principles

generally accepted in the United States of America.

Consideration of Internal Control

The objectives of internal control are the following:

• Financial reporting: Transactions are properly recorded, processed, and summarized to permit the preparation of the Custodial Schedule in conformity with

accounting principles ge n e ra l ly accepted in the United States of A m e ri c a ,

and assets are safeguarded against loss from unauthorized acquisition, use, or 

disposition.

• Compliance with applicable laws and regulations: Transactions are executed in

accordance with laws and regulations that could have a direct and material effect

on the Custodial Schedule.

Our consideration of internal control over financial reporting would not necessarily

disclose all matters in the internal control over financial reporting that might be material

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

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

that errors, fraud, or noncompliance in amounts that would be material in relation to the

Custodial Schedule being audited may occur and not be detected within a timely period
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by employees in the normal course of performing their assigned functions. For those 

controls we tested, we found no material weaknesses in internal control over financial

reporting and compliance.

Because of limitations inherent in any internal control, errors or fraud may occur and

not be detected. Also, projection of any evaluation of internal control to future periods is

subject to the risk that internal control may become inadequate because of changes in 

conditions or that the effectiveness of the design and operation of policies and procedures

may deteriorate.

We noted a matter involving internal control and its operation that we have reported to

the management of the U. S. Mint in a separate letter dated October 31, 2002.

Compliance with Laws and Regulations

Our tests of compliance with selected provisions of laws regulations disclosed no

instances of noncompliance that are required to be reported 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 or applicable OMB audit guidance. We caution that noncompliance may occur and not be detected by these tests and that such testing may not be

sufficient for other purposes.

This report is intended solely for the information and use of the management of the U.S.

Mint, and the U.S. Department of the Treasury, OMB, the Congress, and Urbach, Kahn &

Werlin, LLP, and is not intended to be and should not be used by anyone other than these

specified parties.

Your staff has reviewed our report, and has no comments. Should you have any

questions, please contact me on (202) 927-5430, or a member of your staff may contact

Louis King, Director, Financial Audits on (202) 927-5774. We appreciate the cooperation

and the courtesies extended to our staff.

William H. Pugh

Deputy Assistant Inspector General for 

Financial Management and Information 

Technology Audits

October 31, 2002
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DEPARTMENT OF THE TREASURY

UNITED STATES MINT

SCHEDULE OF CUSTODIAL GOLD AND SILVER RESERVES

AS OF SEPTEMBER 30, 2002 AND 2001 (in thousands)

CUSTODIAL GOLD AND SILVER RESERVES 2002 2001

United States gold and silver reserves (Note 2) $10,364,687 $10,364,687

Liability to Treasury (Note 2) $10,364,687 $10,364,687 

Net gold and silver reserves custodial position $ 0 $ 0

The accompanying notes are an integral part of this Schedule.

NOTES TO THE SCHEDULE OF CUSTODIAL GOLD AND SILVER RESERVES

AS OF SEPTEMBER 30, 2002 AND 2001

Note 1. Summary of Significant Accounting Policies

A. Reporting Entity

The United States Mint (U.S. Mint), established in 1792, is an integral part of the

Department of the Treasury. The mission of the U.S. Mint is to manufacture coins for 

general circulation. In addition to manufacturing circulating coins, the U.S. Mint manufactures numismatic products, which include medals, proof coins, uncirculated coins,

bullion coins (gold, platinum, and silver), and commemorative coins. These manufacturing operations are reported in the manufacturing segment of the U.S. Mint’s consolidated

financial statements. The U.S. Mint is also the custodian of a significant portion of the

United States’ gold and silver reserves, which are presented in the reserves segment of the

U.S. Mint’s Statements of Financial Position. The U.S. Mint uses the term custodial to

identify gold and silver reserves held for the U.S. Treasury. The custodial reserves are not

assets of the U.S. Mint, but are assets of the U.S. Treasury.

The U.S. Mint’s custodial activities, including the protection of the United States’ gold

and silver reserves, are funded by the U.S. Mint’s Public Enterprise Fund (PEF).

B. Basis of Presentation

This Schedule has been prepared to report the gold and silver reserves custodial position of the U.S. Mint. The books and records of the U.S. Mint have served as the source

of the information contained herein. The Schedule has been prepared in accordance with

accounting principles generally accepted in the United States of America and U.S. Mint

accounting policies.

This Schedule includes all gold and silver classified by the U.S. Mint as “custodial

reserves” as defined in Note 2. This Schedule does not include gold and silver withdrawn
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from the “custodial reserves” for use in the operations of the U.S. Mint’s PEF. The U.S.

Mint’s PEF is authorized to use gold and silver from the custodial reserves to support its

numismatic operations. This Schedule does not reflect any United States’ gold and silver

reported by the U.S. Mint in its operating inventory or any reserve amounts due to be

replenished by the PEF, nor does it include gold held at Federal Reserve Banks.

Note 2. Gold and Silver Reserves

The gold and silver reserves reported in this Schedule are exclusive of the gold and 

silver reserves considered to be operating inventory in the Mint’s financial records and of

the Treasury gold held by the Federal Reserve Banks. The custodial gold and silver

reserves included in this Schedule are primarily in bar form, but may occasionally be in

coin or other form. The custodial reserves also include foreign gold coins that have been

held by Treasury for many years. 

The gold and silver reserves are reported in this Schedule at the lower of cost or market

value. Absent historical records to determine the acquisition cost of the gold and silver

over the decades, the reserves are valued at the rates stated in U.S. Code Title 31,Sections

5116 and 5117 (statutory rates) which are $42.2222 per Fine Troy Ounce (FTO) of gold

and $1.292929292 per FTO of silver. An offsetting liability is also reported for these

assets.

At September 30, 2002 and 2001, the market value of gold was $323.70 per FTO and

$293.10 per FTO respectively. Gold inventories consisted of the following at

September 30:

FTO Statutory Value Market Value

2002 245,262,897.040 $10,355,539,091 $79,391,599,772

2001 245,262,897.040 $10,355,539,091 $71,886,555,122

At September 30, 2002 and 2001, the market value of silver was $4.5325 per FTO and

$4.5825 per FTO respectively. Silver inventories consisted of the following at

September 30:

FTO Statutory Value Market Value

2002 7,075,171.14 $ 9,147,696 $ 32,068,213

2001 7,075,171.14 $ 9,147,696 $ 32,421,972
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The combined gold and silver custodial reserves consisted of the following at

September 30:

Statutory Value Market Value

2002 $10,364,686,787 $79,423,667,985

2001 $10,364,686,787 $71,918,977,094

In prior years, custodial gold and silver FTOs were transferred to the PEF for numismatic operations. The PEF is responsible for either replenishing the custodial reserves

with purchases of newly mined gold or paying the Treasury General Fund for the 

custodial reserves used.
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2001 DATED NUMISMATIC COINS SHIPPED IN FY 2001 AND FY 2002 

OCTOBER 2000 TO SEPTEMBER 2002

2001 United States Mint Annual Proof Set (10 coins) final 2,294,043 

2001 United States Mint Annual 50 State Quarters Proof Set (5 coins) final 799,231 

2001 United States Mint Annual Uncirculated Set (20 coins) final 1,113,623 

2001 United States Mint Annual Silver Proof Set (10 coins) final 889,694 

2001 American Eagle Gold Proof Program final

One-Ounce Coins 24,544 

Half-Ounce Coins 23,227 

Quarter-Ounce Coins 25,594 

Tenth-Ounce Coins 37,515 

Total 110,880 

2001 American Eagle Platinum Proof Program final

One-Ounce Coins 8,962 

Half-Ounce Coins 8,246 

Quarter-Ounce Coins 8,839 

Tenth-Ounce Coins 12,163 

Total 38,210 

2001 American Eagle Silver Proof Program final

One-Ounce Coins 742,651 

2001 American Buffalo Commemorative Coin Program final

Silver $1 Proof Coins 272,869 

Silver $1 Uncirculated Coins 227,131 

Total 500,000 

2001 Capitol Visitor Center Commemorative Coin Program final

Gold $5 Proof Coins 27,652 

Gold $5 Uncirculated Coins 6,761 

Silver $1 Proof Coins 143,793 

Silver $1 Uncirculated Coins 35,380 

Clad $.50 Proof Coins 77,962 

Clad $.50 Uncirculated Coins 99,157 

Total 390,705 

2001 American Eagle Gold Bullion final

One-Ounce Coins 143,572 

Half-Ounce Coins 48,047 

Quarter-Ounce Coins 69,245 

Tenth-Ounce Coins 268,913 

Total 529,777 

2001 American Eagle Platinum Bullion final

One-Ounce Coins 14,070 

Half-Ounce Coins 12,810 

Quarter-Ounce Coins 21,810 

Tenth-Ounce Coins 51,662 

Total 100,352 

2001 American Eagle Silver Bullion final

One-Ounce Coins 9,000,876 

TOTAL SHIPPED 16,510,042 
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U N I T E D S T A T E S M I N T 2 0 0 2 A N N U A L R E P O R T

2002 DATED NUMISMATIC COINS SHIPPED IN FY 2002 

OCTOBER 2001 TO SEPTEMBER 2002

2002 United States Mint Annual Proof Set (10 coins) ongoing 1,817,547 

1999-2001 United States Mint Proof Set Collection (29 coins) ongoing 14,453 

2002 United States Mint Annual 50 State Quarters Proof Set (5 coins) ongoing 617,893 

2002 United States Mint Annual Uncirculated Set (20 coins) ongoing 854,097 

2002 United States Mint Annual Silver Proof Set (10 coins) ongoing 603,876 

2002 American Eagle Gold Proof Program ongoing

One-Ounce Coins 22,827 

Half-Ounce Coins 21,095 

Quarter-Ounce Coins 22,089 

Tenth-Ounce Coins 31,206 

Total 97,217 

2002 American Eagle Platinum Proof Program ongoing

One-Ounce Coins 6,090 

Half-Ounce Coins 5,505 

Quarter-Ounce Coins 5,869 

Tenth-Ounce Coins 7,903 

Total 25,367 

2002 American Eagle Silver Proof Program ongoing

One-Ounce Coins 481,800 

2002 Winter Olympics Commemorative Coin Program ongoing

Gold $5 Proof Coins 32,351 

Gold $5 Uncirculated Coins 10,172 

Silver $1 Proof Coins 163,773 

Silver $1 Uncirculated Coins 39,213 

Total 245,509 

2002 United States Military Academy Commemorative Coin Program ongoing

Silver $1 Proof Coins 267,184 

Silver $1 Uncirculated Coins 96,668 

Total 363,852 

2002 American Eagle Gold Bullion ongoing

One-Ounce Coins 156,000 

Half-Ounce Coins 56,000 

Quarter-Ounce Coins 48,000 

Tenth-Ounce Coins 180,000 

Total 440,000 

2002 American Eagle Platinum Bullion ongoing

One-Ounce Coins 9,500 

Half-Ounce Coins 21,000 

Quarter-Ounce Coins 21,400 

Tenth-Ounce Coins 15,000 

Total 66,900 

2002 American Eagle Silver Bullion ongoing

One-Ounce Coins 9,049,000 

TOTAL SHIPPED 14,677,511 
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CY2001 U.S. CIRCULATING COIN MINTAGE UPDATE (in pieces)

JANUARY - DECEMBER 2001

DENOMINATION PHILADELPHIA DENVER TOTAL

Lincoln Cents 4,959,600,000 5,374,990,000 10,334,590,000 

Jefferson 5 Cents 675,704,000 627,680,000 1,303,384,000 

Roosevelt Dimes 1,369,590,000 1,412,800,000 2,782,390,000 

50 State Quarters 2,482,400,000 2,324,584,000 4,806,984,000 

Kennedy Half Dollars 21,200,000 19,504,000 40,704,000 

Golden Dollars 62,468,000 70,939,500 133,407,500 

TOTAL 9,570,962,000 9,830,497,500 19,401,459,500 

CY2001 STATE QUARTER MINTAGE(in pieces)

STATE QUARTER PHILADELPHIA DENVER TOTAL 

New York 655,400,000 619,640,000 1,275,040,000 

North Carolina 627,600,000 427,876,000 1,055,476,000 

Rhode Island 423,000,000 447,100,000 870,100,000 

Vermont 423,400,000 459,404,000 882,804,000 

Kentucky 353,000,000 370,564,000 723,564,000 

TOTAL 2,482,400,000 2,324,584,000 4,806,984,000 

CY2002 U.S. CIRCULATING COIN MINTAGE UPDATE(in pieces)

JANUARY - SEPTEMBER 2002

DENOMINATION PHILADELPHIA DENVER TOTAL

Lincoln Cents 2,635,200,000 3,520,040,000 6,155,240,000 

Jefferson 5 Cents 453,360,000 620,880,000 1,074,240,000 

Roosevelt Dimes 1,006,500,000 1,224,500,000 2,231,000,000 

50 State Quarters 1,303,400,000 1,430,704,000 2,734,104,000 

Kennedy Half Dollars – – –

Golden Dollars 3,445,610 3,732,000 7,177,610 

TOTAL 5,401,905,610 6,799,856,000 12,201,761,610 

CY2002 STATE QUARTER MINTAGE(in pieces)

STATE QUARTER * PHILADELPHIA DENVER TOTAL

Tennessee 361,600,000 286,468,000 648,068,000 

Ohio 217,200,000 414,832,000 632,032,000 

Louisiana 362,000,000 402,204,000 764,204,000 

Indiana 362,600,000 327,200,000 689,800,000 

Mississippi – – –

TOTAL 1,303,400,000 1,430,704,000 2,734,104,000 

* Production numbers are published only after completion of a given state quarter program.
NOTES

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