In the Conference Report to Public Law 104-52, enacted November 19, 1995, which created the United States Mint Public Enterprise Fund (PEF), Congress directed the Mint to report quarterly on implementation of the PEF. This is the United States Mint’s 31st quarterly report to Congress.
Contents
Summary
FY 2003 circulating production totaled about 11.3 billion coins — the lowest production total since 1974. Mint-wide gross revenues for FY 2003 totaled about $1.5 billion — down from about $1.8 billion in FY 2002.
Fourth quarter circulating collections totaled about $204 million — down by 18 percent from third quarter. Fourth quarter numismatic revenues totaled about $68 million — down by 31 percent from third quarter. Fourth quarter bullion revenues totaled about $36 million — up by 29 percent from third quarter.
The United States Mint transferred $600 million to the Treasury General Fund.
The Secretary of the Treasury appointed a Chairperson for a one-year term and a representative of the general public to the Citizens Coinage Advisory Committee.
The Missouri State commemorative quarter-dollar coin was launched.
The United States Mint’s Lost Time Accident rate dropped from 2.22 in FY 2002 to 1.48 in FY 2003.
United States Mint won two prestigious Coin Of The Year Awards.
The United States Mint is in the final stages of establishing an Artistic Infusion Program that will enrich and invigorate coin designs.
The United States Mint signed a new licensing agreement with Wonderland Marketing for product distribution through the United States Postal Service’s Official Licensed Retail Product Program.
The United States Mint continues to enhance the free educational resources featured on its website.
OTHER HIGHLIGHTS: The 2003-dated one-ounce American Eagle Gold Proof Coins sold out quickly./ Planning continues for the XXIII Mint Directors Conference, which the United States Mint will host in San Francisco in March 2004. / The George W. Bush medal was presented to President George W. Bush./ The First Flight Centennial Commemorative Coins and National Wildlife Refuge System Centennial Medal Series were released./ Mint managers and union leaders discussed potential strategies for confronting economic challenges associated with decreased coin demand./ United States Mint activities were covered in two General Accounting Office audits and one Treasury Office of Inspector General audit.
State of the Mint
The United States Mint’s primary responsibilities are as follows:
- Producing an adequate volume of circulating coins for the United States to conduct its trade and commerce,
and distributing these coins to the Federal Reserve. - Manufacturing, marketing and selling proof and uncirculated coins, commemorative coins and medals to the general public. These products are known as numismatic products.
- Manufacturing, marketing and selling gold, silver and platinum bullion coins through the American Eagle Bullion Program. The value of American Eagle Bullion Coins generally depends upon their weight in specific precious metals. (By contrast, the numismatic value of other types of coins generally depends upon factors such as mintage, rarity, condition and age.) American Eagle Bullion Coins provide investors with a simple and tangible means to own precious metals. Not sold directly to the general public by the United States Mint, these products are available through authorized purchasers.
- Safeguarding United States Mint assets and non-Mint assets that are in the Mint’s custody, including bullion reserves at the Fort Knox Bullion Depository and elsewhere.
Status of the Public Enterprise Fund
The United States Mint’s Public Enterprise Fund is financed by the sale of circulating coins to the Federal Reserve and the sale of numismatic products and bullion coins and other products to customers worldwide.
Table #1
QUARTERLY COMPARISON OF REVOLVING FUND REVENUE
(Millions of Dollars)
| Product Category | FY 2003 4th Qtr |
FY 2003 3rd Qtr |
Change |
|---|---|---|---|
| Circulating Collections | $204 | $248 | -18% |
| Numismatic Revenues | $68 | $99 | -31% |
| Bullion Revenues* | $36 | $28 | +29% |
| TOTAL | $308 | $375 | -18% |
Table #2
FISCAL YEAR COMPARISON OF REVOLVING FUND REVENUE
(Millions of Dollars)
| Product Category | FY 2003 4th Qtr |
FY 2002 4th Qtr |
Change |
|---|---|---|---|
| Circulating Collections | $204 | $408 | -50% |
| Numismatic Revenues | $68 | $85 | -20% |
| Bullion Revenues* | $36 | $63 | -57% |
| TOTAL | $308 | $556 | -45% |
* Investment versions, proof versions will be included in numismatic sales when offered.
Circulating: The demand for circulating coins by commercial establishments and the general public fluctuates with the United States’ economy. To accommodate this variability, the United States Mint and the Federal Reserve regularly assess their inventories and the demand for circulating coins, and adjust their production, ordering and delivery schedules accordingly.
During the fourth quarter of FY 2003, the United States Mint shipped about 2.9 billion coins to the Federal Reserve — down by about 17 percent from last quarter’s shipments of about 3.5 billion coins. Reflecting this shipment decrease, circulating revenues for the fourth quarter of FY 2003 totaled about $204 million — down by about 18 percent from last quarter’s circulating collections of about $248 million. (See Table #1.)
This calendar quarter’s circulating collections of about $204 million were about 50 percent lower than circulating collections from the same quarter of FY 2002, which totaled about $408 million. (See Table #2.) This decrease corresponds with the state of the economy. It also reflects improved coin inventory management by the United States Mint and the Federal Reserve, which is enabling the Federal Reserve to better align its coin orders with true coin demand and reduce the high variability in its coin orders.
Because the Federal Reserve’s coin order for next calendar quarter is somewhat lower than this quarter’s coin order, next quarter’s circulating production will likely be somewhat lower than this quarter’s circulating production. This expected decline is a result of anticipated economic conditions and further improvements in coin inventory management.
Numismatic Products: During the fourth quarter of FY 2003, numismatic revenues totaled about $68 million — down by about 31 percent from last quarter’s numismatic revenues of about $98.6 million. (See Table #1.) This decrease in numismatic revenues is the net result of the following factors: (1) A $30.7 million decrease in revenues from the American Eagle Proof Program; (2) A $9.0 million decrease in revenues from Recurring Programs; (3) A $6.2 million increase in revenues in the Commemorative Coins Program; and (4) A $2.6 million increase in revenues from excess jewelry sales sold through the General Services Administration. (These sales close-out the United States Mint’s direct-to-consumer jewelry sales.)
Numismatic revenues from the fourth quarter of FY 2003 were about 20 percent lower than numismatic revenues from the same quarter of FY 2002, which totaled about $85 million. (See Table #2.) This decrease, which generally reflects the weak economy and delayed production of key products, is the net result of the following factors: (1) A $19.8 million decrease in Proof Program revenues; and (2) A $0.3 million decrease in Recurring Programs revenues. This quarter’s numismatic revenues were expected to fall short of fourth quarter FY 2002 revenues, which were boosted by the proceeds from a one-of-a-kind sale of a 1933 Double Eagle of almost $3.8 million.
During the first quarter of FY 2004, numismatic revenues will probably range between $40 million and $50 million. This projection is based upon the likelihood that sales will remain strong through December 2003 but will not be augmented by any launches of major products.
Bullion Coins: During the fourth quarter of FY 2003, bullion revenues totaled about $36 million — up by about 29 percent from last quarter’s revenues of $28 million. (See Table #1.) This quarter’s bullion revenues were about 57 percent lower than revenues from the same quarter of FY 2002, which totaled about $63 million. (See Table #2.)
Transfer to the General Fund
During FY 2003, the United States Mint transferred $600 million to the Treasury General Fund. Of this sum, $567 million was from circulating net results and $33 million was from numismatic profits.
Update on Mint Activities
Citizens Coinage Advisory Committee
The 11-member Citizens Coinage Advisory Committee (CCAC) advises the Secretary of the Treasury on the selection of themes and designs for circulating coins, bullion coins, commemorative coins, Congressional Gold Medals and other medals, and on mintage levels for coin and medal programs.
On September 25, 2003, the Secretary of the Treasury appointed a CCAC Chairperson for a one-year term and a ccac representative of the general public. CCAC positions for another representative of the general public, a member specially qualified in numismatics and a member specially qualified in U.S. history are currently vacant.
The CCAC held a public meeting on July 31, 2003 at the American Numismatic Association’s annual convention in Baltimore, Maryland. At this meeting, the CCAC reviewed designs for the Wisconsin State Quarter, reviewed new designs for the nickel, and discussed themes for the 2004 American Eagle Platinum Proof coin. At a September 23, 2003 meeting, the CCAC reviewed designs for the Mint Directors Conference medal and the redesigned nickel.
50 State Quarters Program
Launch of Missouri State Quarter: On August 10, 2003, United States Mint Director Henrietta Holsman Fore, Missouri Governor Bob Holden and First Lady Lori Hauser Holden unveiled the Missouri State commemorative quarter-dollar at the Missouri State Fair in Sedalia, Missouri. This launch ceremony marked the 24th coin issued under the 50 State Quarters Program, and the fourth quarter-dollar coin release of calendar year 2003. Serving as Master of Ceremonies at the ceremony was Dr. Robert Archibald, President of the National Council of the Lewis and Clark Bicentennial and Co-Chairman of the Missouri Lewis and Clark Bicentennial Commission. Missouri’s launch ceremony was the first launch of the 50 State Quarters Program that coincided with a state’s day of statehood. (Missouri was admitted to the Union on August 10, 1821.)
The Missouri quarter showcases Lewis and Clark’s historic return to St. Louis down the Missouri River, with the Jefferson National Expansion Memorial (Gateway Arch) in the background. This coin is inscribed with the words “CORPS OF DISCOVERY 1804-2004.” It is the first circulating coin to depict Lewis and Clark’s historic expedition nearly 200 years ago.
Launch of Arkansas State Quarter: The United States Mint will launch the Arkansas state quarter on October 28, 2003, at the Crater of Diamonds State Park in Murfreesboro, Arkansas.
2004 State Quarter Designs: During calendar year 2004, commemorative state quarter-dollars will be released for Michigan, Florida, Texas, Iowa and Wisconsin. Designs for each of these coins have been approved by the Secretary of the Treasury.
Safety
The United States Mint is committed to reducing its lost time accident (LTA) rate to zero. The United States Mint is improving on this goal; its LTA rates per 200,000 work hours have generally trended downwards since the mid-1990s. Continuing this downward trend, the United States Mint’s LTA rate for FY 2003 was 1.48 — down by 35 percent from FY 2002, 64 percent from FY 2001 and 71 percent from 2000. (See chart.)
During FY 2003, the United States Mint worked to further improve its safety record by chartering a Safety Steering Committee composed of senior managers and union officials. Actions taken by the Safety Steering Committee included drafting a directive that defines the responsibilities for its ongoing safety program. The Steering Committee also guided a solicitation that produced a contract between the United States Mint and a professional safety consulting firm to assist with the design and launch of a more unified Mint-wide safety program.
5-Cent Coin (Nickel) Redesign
The current design of the nickel, which features a likeness of President Jefferson on the obverse and a likeness of Monticello on the reverse, has remained unchanged since 1938. The American 5-Cent Coin Design Continuity Act of 2003 (Public Law 108-15) authorizes the Secretary of the Treasury to change the obverse and reverse designs of nickels issued in 2003, 2004 and 2005, in recognition of the bicentennials of the Louisiana Purchase and the Lewis and Clark expedition.
The CCAC and the numismatic community have expressed interest in a design series for the nickel. Accordingly, the United States Mint has recommended to the Secretary of the Treasury that he approve two new reverse designs for the 2004-dated nickel. The United States Mint has recommended that the Secretary maintain the current obverse design for the 2004-dated nickels.
United States Mint Receives Two Coin of the Year Awards
During the fourth quarter of FY 2003, the United States Mint received the Best Trade Coin Award for the 2001-dated Rhode Island State Quarter and the Most Popular Coin Award for the 2001-dated American Buffalo Commemorative Coin. These Coin of the Year Awards are among the world’s most prestigious awards for innovation and beauty in coin design.
Coin of the Year Awards are sponsored by Krause Publications, the publisher of Numismatic News. (Because of the comprehensive nature of the selection process for these awards, they are routinely given to coins that were issued two years previously.)
Artistic Infusion Program
The United States Mint is currently in the final stages of establishing an Artistic Infusion Program. This program will create a pool of established artists and college-level/graduate students in graphic design, sculpture, engraving, drawing and other visual arts who will be invited to create and submit new designs for selected coins and medals that will be sculpted and engraved by United States Mint sculpture/engravers. The United States Mint believes that the Artistic Infusion Program will help enrich and invigorate the designs of its coins and medals.
During the fourth quarter of FY 2003, work progressed on developing an interagency agreement with the National Endowment for the Arts (NEA) that will enable the NEA to assist the United States Mint review artists’ applications to the Artistic Infusion Program. During this quarter, the United States Mint also prepared to release the Artistic Infusion Program’s “Call for Artists” in Fall 2003. This document will explain program details, artist eligibility requirements, and application guidelines. It will be posted on the Internet and distributed to art schools and arts organizations.
Licensing
The mission of the United States Mint’s Office of Licensing is to protect the integrity and image of the Mint’s intellectual property. The Office of Licensing works together with the Office of Chief Counsel to monitor compliance with the United States Mint’s licensing agreements and address infringement of the Mint’s intellectual property.
During the fourth quarter of FY 2003, the United States Mint’s Office of Licensing signed a licensing agreement with Wonderland Marketing and the United States Postal Service that will enable United States Mint products to be sold through the United States Postal Service’s Official Licensed Retail Product Program. United States Mint products marketed under this agreement will incorporate images from the 50 State Quarters and Greetings from America Programs.
The United States Mint maintains an active licensing agreement with H.E. Harris, one of the nation’s largest distributors of stamp and coin collecting products. Products marketed under this agreement include coin albums and folders, portfolios, handbooks, bookmarks, magnifiers, coin collecting kits, coin wrappers, other coin-holding products, and “The Collector’s Archive,” which features historical information and a map of the United States that can hold state quarters.
The United States Mint anticipates that its licensing agreements will stimulate interest in coin-collecting, enable the United States Mint to enter mass retail markets that would have otherwise remained inaccessible and enhance the branding of Mint products.
The United States Mint’s Office of Licensing is currently evaluating applications and inquiries about licensing opportunities offered by the United States Mint; these applications and inquiries were generated by an advertisement placed by the United States Mint in the July 2003 issue of License! magazine.
Education Initiatives
The United States Mint’s educational website, which features coin-related games, lesson plans and fun facts for teachers, parents and children, has received more than 2.5 million visits since its 1999 launch. (The site is called the United States Mint’s H.I.P. Pocket Change™ and is posted at www.usmint.gov/kids). During FY 2003 alone, the site received more than 930,000 visits — up by 38 percent since FY 2002.
During the fourth quarter of FY 2003, the United States Mint Education Initiative added two new animated, interactive educational tools to the H.I.P. Pocket Change website: “When Pigs Fly!” and “Coins of the World: Japan.” When Pigs Fly! is a dynamic game that teaches the basics of aerodynamics; its release accompanied the United States Mint’s release of the 2003 First Flight Centennial Commemorative Coin. “Coins of the World: Japan” is an educational cartoon that introduces kids to the use of passports, the culture, history and currency of members of the European Union.
During FY 2003, the United States Mint accompanied 50 State Quarters Program launches with the release of free, coin-centric lesson plans for K through 6th graders. During FY 2003, these lesson plans were downloaded more than 770,000 times. Also during FY 2003, the United States Mint released a Web Quest — a computer-based educational resource that introduces middle school students to the history and culture of the United States.
Because of the popularity of these United States Mint’s coin-centric lesson plans for K through 6th graders and Web Quest, the Mint’s website will soon offer lesson plans for 8th through 12th graders, as well. High school educators will be informed about these educational resources once they become available.
Other Highlights
Sell-Out of 2003 American Eagle Gold Proof One-Ounce Coin
The United States Mint individual 2003-dated one-ounce American Eagle Gold Proof Coins sold out on July 6, 2003, seven weeks after going on sale. (As a result, this coin is now only available as part of the United States Mint’s American Eagle Gold Proof Four-Coin Set.) By comparison, the 2002-dated one-ounce American Eagle Gold Proof Coin sold out on August 21, 2002, 11 weeks after going on sale. In addition, the 2003-dated half-ounce, quarter-ounce, tenth-ounce American Eagle Gold Proof Coin and the popular Four-Coin Set have also been selling above 2002 levels.
Mint Directors Conference
United States Mint Director Henrietta Holsman Fore is currently Vice President of the Mint Directors Conference (MDC) — an international body that promotes the exchange of information about manufacturing, technical, marketing and financial issues among its international membership of the world’s mints.
The United States Mint will host the XXIII MDC in San Francisco, California, from March 18 to 23, 2004. (Immediately following the XXIII MDC, Director Fore will become President of the MDC.) During the fourth quarter of FY 2003, the United States Mint released a second notification for registration for the XXIII MDC. In addition, the United States Mint held a planning meeting for the XIII MDC on August 1, 2003 at the General Assembly meeting of the MDC in Baltimore, Maryland.
Medals and Commemorative Coins
President George W. Bush Medal: This medal was presented to President George W. Bush on July 31, 2003. A bronze version of this medal is available to the public.
The obverse of the George W. Bush medal features images of President Bush and the American flag along with the inscription, “GEORGE W. BUSH.” The reverse features images of the south portico of the White House and the Presidential Seal, along with the inscription, “WE WILL NOT TIRE, WE WILL NOT FALTER, AND WE WILL NOT FAIL.” The President George W. Bush medal was produced through a process that created a frosted matte finish.
2003 First Flight Centennial Commemorative Coins: On August 1, 2003, this series of gold, silver and clad commemorative coins went on sale over the United States Mint’s website. These commemoratives have also been marketed via a direct mail campaign that targeted about 1.2 million customers; direct response print advertisements that appeared in major numismatic publications, such as Coin World and Numismatic News, and publications recommended by the First Flight Centennial Foundation; a prominent advertisement on the back cover of the United States Mint’s annual print catalogue; and flyers that were included in mailings from the First Flight Centennial Foundation and distributed to visitors to the Wright Monument in Kill Devil Hills, North Carolina.
The First Flight Commemorative Coin series honors the 100th anniversary of Orville and Wilbur Wright’s historic flight near Kitty Hawk, North Carolina. A surcharge on sales of this coin series is authorized to help pay for the maintenance of the Wright Brothers Monument in North Carolina.
The obverse of the gold First Flight coin and the silver First Flight coin features an image of the Wright Brothers, and the obverse of the clad First Flight coin features an image of the Wright Monument. The reverse side of each coin features an image of Orville and Wilbur Wright’s airplane.
2003 National Wildlife Refuge System Centennial Medal Series: This series comprises four silver medals that have a common obverse depicting President Theodore Roosevelt, founder of the National Wildlife Refuge System. Each of the four reverses features either a bald eagle, salmon, elk or ducks — all species that are protected by the National Wildlife Refuge System. A bronze duplicate of the bald eagle medal is also being produced.
The National Wildlife Refuge System Medal Series became available through the United States Mint’s subscription program on June 17, 2003, and then through direct sales on July 24, 2003. Brisk sales of this series — which is the first silver medal series ever offered by the United States Mint — reflect its wide acceptance by United States Mint customers and the numismatic community. A commission based upon a percentage of the proceeds from sales of these medals is authorized to benefit the National Fish and Wildlife Foundation and its conservation efforts.
The silver medals in the National Wildlife Refuge System Medal Series are struck in proof condition featuring a distinctive matte-finish artwork on a mirror-like background. They are the first United States Mint products to be produced with laser technology.
2004 Lewis and Clark Commemorative Coin: This commemorative coin will be released in May 2004 to mark the 200th anniversary of Lewis and Clark’s departure from St. Louis. A surcharge on sales of this coin is authorized to benefit the National Lewis and Clark Bicentennial Council and the National Park Service for activities marking the anniversary of the Lewis and Clark expedition.
The obverse side of the Lewis and Clark Commemorative Coin features an image of Meriwether Lewis and William Clark on a stream bank planning their travel and exploration. The reverse side of this coin features two feathers representing the many Native American Indian cultures studied by the Corps of Discovery Expedition.
2004 Thomas A. Edison Silver Dollar: Candidate designs for this coin were approved by the Secretary of the Treasury in May 2003. This coin will honor 125th anniversary of Thomas A. Edison’s invention of the light bulb. A surcharge on sales of this coin is authorized to be divided among eight organizations that are dedicated to paying tribute to Thomas Edison. This coin’s release date has not yet been scheduled.
The obverse side of the Thomas A. Edison Silver Dollar features an image of Thomas A. Edison at mid-life with the “Edison Effect” bulb in his West Orange, New Jersey, laboratory. The reverse side of this coin features an image of a light bulb sending out rays of light. The dates “1879-2004” appear at the base of the light bulb, and the words “125th ANNIVERSARY OF THE LIGHT BULB” appear over the light bulb.
Partnerships
United States Mint/United States Postal Service (USPS) Partnership: Each state receiving a 50 State Quarters coin during a particular year will be honored through the following products, which are jointly produced by the United States Mint and USPS:
- 50 State Quarters Greetings from America Card Sets: Each state’s Card Set includes: (a) A baseball card-sized card of the state; (b) The state quarter; and (c) The state’s Greetings from America stamp.
- 50 State Quarters Greetings from America Portfolios: Each state’s Portfolio includes: (a) Scenic photographs of the state; (b) The state quarter; and (c) The state’s Greetings from America stamp.
During the fourth quarter of FY 2003, sales of the 2001-dated Portfolios and Card Sets were launched, and the 2003-dated Card Sets and Portfolios were featured in the United States Mint’s annual catalog in preparation for their launch following the striking of the Arkansas State Quarter.
Earlier this year, sales of the 1999-dated, 2000-dated, and 2002-dated Portfolios and State Card Sets were launched. The 2002-dated Portfolios and Card Sets will be released later this year. Products representing remaining years in the program — 2004 through 2008 — will be released at the end of each respective year.
Card Sets and Portfolios can be purchased over the websites and 800 telephone numbers of the United States Mint and USPS, and through the United States Mint’s Subscription Program. Sales of these products at USPS retail locations will kick-off in October 2003.
To date, the United States Mint’s revenues from the 50 State Quarters Greetings from America Series total about $2,000,000. (This figure excludes revenues generated from USPS sales.)
United States Mint/Bureau of Engraving and Printing (BEP) Partnership: Since September 2002, the United States Mint has been selling new uncut sheets of $1.00, $2.00 and $5.00 bills produced by the BEP. These products were featured in the latest edition of the United States Mint’s annual catalog. To date, the United States Mint’s revenues from sales of uncut currency sheets total about $2,700,000. The United States Mint is continuing to explore possibilities for jointly developing additional products with BEP.
National Archives and Records Administration (NARA): The Lewis and Clark Coin and Currency Coin set will be released in 2004 through the United States Mint’s partnership with the NARA. This product will include various products, including coins produced by the United States Mint, stamps produced by the USPS, Lewis and Clark Buffalo Notes produced by the BEP, and narrative text and photos of rare artifacts provided by NARA.
Mint Management Meeting
From September 9 through September 11, 2003, about 60 United States Mint managers and union leaders met for three days in Washington, DC to discuss potential strategies for confronting economic challenges associated with decreased demand for circulating, numismatic and bullion coins. These strategies included adopting efficiency-boosting technologies; reducing expenses and production costs; decreasing production costs; and speeding the delivery of products to the market.
Fourth Quarter Audits
During the fourth quarter of FY 2003:
- The U.S. General Accounting Office (GAO) began an audit entitled, Selected Agencies’ Use of Alternative Service Delivery (ASD) for Accomplishing Human Capital Activities. This audit, which covers the activities of the United States Mint along with those of other agencies, is designed to identify the different types of Alternate Service Delivery (ASD) options used by selected agencies to accomplish their human capital objectives, their rationales for using ASD initiatives, ways in which ASD initiatives are managed and important lessons learned from the use of ASD initiatives. GAO plans to complete the review by December 2003.
- GAO continued reviewing differences among the budgetary, accounting and cost oversight methods used by the United States Mint for producing coins and those used by the Bureau of Engraving & Printing for producing paper currency. As requested, the United States Mint recently provided GAO with performance measurement and productivity data, as well as information clarifying the United States Mint’s forecasting and inventory management practices.
- The Treasury Office of Inspector General’s (OIG) issued a discussion draft audit report resulting from its audit of the United States Mint’s Purchase Card program. The report is entitled Control Weaknesses and Poor Management Oversight in the Mint’s Purchase Card Program. During the first quarter of FY 2004, the United States Mint will meet with the OIG to further discuss the preliminary findings from this audit before they are issued in a final report.