United States Mint Report to Congress on Operations From January 1, 2003 through March 31, 2003 Second Quarter Fiscal Year 2003

This is a bar chart showing the lost time accident rate per 200,000 work hours for Fiscal Years 1997-2003. In FY 97, the rate was 5.89 per 200,000 work hours. In FY 98, the rate was 4.22 per 200,000 work hours. In FY 99, the rate was 4.12 per 200,000 work hours. In FY 00, the rate was 4.97 per 200,000 work hours. In FY 91, the rate was 3.93 per 200,000 work hours. In FY 02, the rate was 2.26 per 200,000 work hours. In FY 03 Q2, the rate was 1.60 per 200,000 work hours.

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 implementation of the PEF. Since then, the Mint has reported on implementation and how it is using PEF flexibilities. This is the twenty-ninth quarterly report.

Contents

  1. Summary
  2. State of the Mint
  3. Update on Activities
  4. Other Highlights

Summary

  • 2nd Quarter FY 2003 Revenues: Circulating: $253
    million – 9% more than 1st quarter. Numismatics:
    $23 million – 50% less than 1st quarter. Bullion: $139
    million – 334% more than 1st quarter.
  • The United States Mint’s safety record continues to improve.
  • The United States Mint is initiating an Artistic Infusion Program to help invigorate coin and medal designs.
  • Illinois and Alabama State commemorative quarter-dollar coins were launched.
  • Designs are underway for next year’s honorees under the¬ 50 State Quarters Program — Florida, Texas, Iowa, Michigan and Wisconsin.
  • The United States Mint has refined its design evaluation process for the 50 State Quarters Program.
  • The United States Mint and the United States Postal Service jointly launched the 50 State Quarters Greetings From America Series.
  • Coin inventory management is being improved through the development of an Extranet application and through new coin redistribution methods.
  • In addition, an Extranet application to improve supply chain management soon will be pilot-tested.
  • A new advertising program yielded 31,000 new customers and a $2.6 million revenue gain.
  • The United States Mint released a new strategic plan.

OTHER HIGHLIGHTS: The designs of the Lewis and Clark Bicentennial Commemorative Coin and the National Wildlife Refuge System Centennial Medal Series were unveiled./ Designs are underway for the release of the First Flight Commemorative Coins and the Thomas Alva Edison Silver Dollar./ The United States Military Academy Bicentennial Commemorative Coin Program ended./ Three new members of the Citizens Commemorative Coin Advisory Committee were approved by the Secretary of the Treasury./ The Mint played a prominent role in the 2003 World Money Fair in Switzerland./ The Mint’s educational materials continue to gain popularity./ The United States Mint ran an advertisement to generate interest in licensing partnerships.

State of the Mint

The United States Mint’s main responsibilities are:

  • Producing an adequate volume of circulating coins for the Nation 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 primarily depends upon their weight in specific precious metals. (By contrast, the numismatic value of other types of coins primarily 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 precious metal dealers, coin dealers, brokerage companies and participating banks.
  • 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 (PEF) is financed by the sale of circulating coins to the Federal Reserve and the sale of numismatic and bullion coins and other products to customers world-wide.

Table #1
QUARTERLY COMPARISON OF REVOLVING FUND REVENUE
(Millions of Dollars)

Product Category FY 2003
2nd Qtr
FY 2003
1st Qtr
Change
Circulating $253 $232 +9%
Numismatics $23 $46 -50%
Bullion* $139 $32 +334%
TOTAL $415 $310 +34%

Table #2
FISCAL YEAR COMPARISON OF REVOLVING FUND REVENUE
(Millions of Dollars)

Product Category FY 2003
2nd Qtr
FY 2002
2nd Qtr
Change
Circulating $253 $291 -13%
Numismatics $23 $33 -30%
Bullion* $139 $51 +173%
TOTAL $415 $375 +11%

* These are investment versions. Proof versions of American Eagles will be included in numismatic sales when offered.

Circulating Coins: 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 Federal Reserve continually assess their inventories and the demand for circulating coins, and adjust their production, ordering and delivery plans accordingly.

Reflecting a slight increase in coin orders from the Federal Reserve, the United States Mint shipped about 2.6 billion coins to the Federal Reserve during the second quarter of FY 2003 — up by about four percent from the first quarter of FY 2003. This increase in shipments was accompanied by an increase in circulating revenues; the United States Mint’s circulating revenues totaled about $253 million during the second quarter of FY 2003 — up by about nine percent from the previous quarter’s circulating revenues of about $232 million. (See Table #1.)

Circulating revenues during the second quarter of FY 2003 were about 13 percent lower than circulating revenues during the same period of the previous fiscal year, when circulating revenues totaled about $291 million. (See Table #2.)

The Federal Reserve’s coin order for April 2003, as well as projected coin orders for May and June 2003, suggest that circulating revenues will be lower during the third quarter of FY 2003 than they were during the second quarter of FY 2003.

Numismatics Products: Coin collectors commonly refrain from purchasing numismatics products during the second quarter of the fiscal year, as they anticipate the third quarter release of numismatics products for the current calendar year. Therefore, numismatics revenues usually dip to their lowest annual levels during the second quarter of the fiscal year. Following this pattern, numismatic revenues totaled about $23 million during the second quarter of FY 2003 — a 50 percent decline from the previous quarter, when numismatic revenues totaled about $46 million. (See Table #1.)

Numismatics revenues during the second quarter of FY 2003 were about 30 percent lower than those during the same period of the previous fiscal year, when revenues totaled about $33 million. (See Table #2.) It should be noted, however, that second quarter FY 2003 revenues are only relatively low in comparison to second quarter FY 2002 revenues, which were boosted by the launches of products commemorating the Olympic Winter Games and the United States Military Academy at West Point.

During the third quarter of FY 2003, numismatics revenues are expected to increase to between $90 million and $95 million. This increase will reflect the launches of the following 2003 recurring products: the Proof Set, the Uncirculated Set and the Gold and Silver American Eagle Proof Sets.

Bullion Coins: Bullion revenues from the second quarter of FY 2003 totaled about $139 million — up by about 334 percent from the previous quarter. (See Table #1.) In addition, bullion revenues from the second quarter of FY 2003 were about 173 percent higher than bullion revenues from the second quarter of FY 2002, which totaled about $51 million. (See Table #2.)

Update On Activities

Safety

The United States Mint’s year-to-date Lost Time Accident (LTA) rate1 through the second quarter of FY 2003 was 1.60. If the United States Mint maintains this rate through the rest of FY 2003, the Mint will best its LTA from FY 2002, which was 2.3. The United States Mint will thereby continue to reduce its annual LTA rate, as it has generally done since the mid-1990s. (See graph on cover.)

In addition, each of the United States Mint’s six facilities has been reducing its LTA rates and its absolute numbers of lost time accidents. For example, only one LTA has occurred so far during this fiscal year at the San Francisco Mint. By contrast, seven LTAs occurred there by this time last fiscal year.

During the second quarter of FY 2003, the United States Mint achieved another important safety milestone: March 2003 marked the second LTA-free month for the United States Mint during the six years for which detailed monthly records are available. As reported in the United States Mint’s previous PEF report, November 2002 marked the United States Mint’s first LTA-free month.

Also during the second quarter of FY 2003, the United States Mint Safety Steering Committee held its first meetings. This Committee comprises the Designated Agency Safety and Health Official (DASHO), selected members of the Mint’s executive staff and one plant manager who represents the United States Mint’s five field facilities. Thus far, the Committee’s activities have included issuing a charter and directing the Mint to solicit contractors to help design and implement a standardized Mint-wide safety program.

As suggested by the Occupational Safety and Health Administration (OSHA), the United States Mint — like a number of other Federal bureaus — is currently adopting the same work-related accident reporting standards that are used by the private sector and by state and local governments. This change will allow the United States Mint to more accurately compare its safety record with those sectors.

In addition, the current reporting system covers accidents that are sustained by employees who are engaged in after-hours activities during work-related travel, or who are performing non-work tasks. By contrast, the OSHA-supported reporting system focuses on accidents that are sustained by employees who are performing work-related tasks. Therefore, the United States Mint’s adoption of the OSHA-supported system will help the Mint direct its resources towards the types of hazards that are addressed most effectively by workplace safety programs. The United States Mint’s Headquarters safety staff is currently providing information to the Mint’s field safety staffs about the new standards, and discussing its support for these standards with other members of the Treasury Safety and Health Council.

1 LTA rates represent the number of lost time accidents that occur per 200,000 work hours.

Artistic Infusion Program

During the second quarter of FY 2003, the United States Mint began developing the Artistic Infusion Program. The Program’s goal is to create a pool of up to 40 accomplished sculptors, engravers, design experts and graduate-level art students who will contribute to the design of selected coins and medals produced by the United States Mint. The United States Mint believes that this new source of talent will help enrich and invigorate the designs of United States coins and medals.

The United States Mint is currently working with Mint sculptors/engravers and non-Mint art specialists to develop criteria and application procedures for selecting artists for participation in the Artistic Infusion Program. All artists who do participate in the Program will enter into a legal agreement with the United States Mint that will assign rights to submitted designs. They will also attend an orientation program and annual designer symposia to discuss the history of United States coin and medal designs, coin-making processes and upcoming design opportunities.

50 State Quarters® Program

Launch of Illinois State Quarter: On January 6, 2003, United States Mint Director Henrietta Holsman Fore, together with Illinois First Lady Lura Lynn Ryan, launched the Illinois Commemorative State Quarter. This event marked the twenty-first quarter release of the United States Mint’s 50 State Quarters Program, and the first quarter release of calendar year 2003.

The design of the Illinois State Quarter includes an outline of the state, which encloses an image of a young Abraham Lincoln. Also appearing on the coin are images of a farm scene, the Chicago skyline, 21 stars and the inscriptions “21st STATE/CENTURY” and “LAND OF LINCOLN.”

The launch of the Illinois State Quarter, which was held at the Thompson Center in Chicago, Illinois, was attended by about 1,000 school children. The event featured remarks from noted Illinoisans, including actor/screenwriter Harold Ramis, State Treasurer Judy Baar Topinka, State Historian Dr. Tom Schwartz and Illinois Future Farmers of America President Jay Kelley. The event also included singing performances from the Lake Bluff Middle School Choir and Clayton Ann Joyner — a twelve-year-old Springfield-based rising star.

Launch of Alabama State Quarter: On March 24, 2003, Director Fore, together with Alabama Governor Bob Riley, unveiled the Alabama Commemorative State Quarter. This event marked the twenty-second quarter release of the 50 State Quarters Program, and the second quarter release of calendar year 2003.

Appearing on the Alabama State Quarter is an image of Helen Keller underlined by a “SPIRIT OF COURAGE” banner. The design of the Alabama State Quarter, which also includes a reduced-sized version of Helen Keller’s name printed in Braille, is the first United States circulating coin to feature braille.

The launch of the Alabama State Quarter was held in Tuscumbia, Alabama, at “Ivy Green,” Helen Keller’s birthplace. Attended by about 2,500 people, the event featured remarks from several notable Alabamians, including State Senator Bobby Denton; Bill Johnson, the great-nephew of Helen Keller; Scott McCall, Vice President, National Programs Group, American Foundation for the Blind; former United States Senator Howell Heflin; and Heather Whitestone McCallum, “Miss America” of 1995, who is from Alabama.

2004 State Quarter Designs: During the second quarter of FY 2003, the following milestones were achieved:

  • The United States Mint and the Secretary of the Treasury approved the State of Florida’s selection for the design of the Florida State Quarter.
  • The United States Mint prepared candidate designs for the Texas State Quarter. During the third quarter of FY 2003, these candidate designs will be reviewed by the Citizens Commemorative Coin Advisory Committee, the Commission of Fine Arts and the Secretary of the Treasury. Once approved, the candidate designs will be returned to the state, which will make a final design selection. The state’s selection will then be forwarded to the Secretary of the Treasury for final approval.

Design Evaluation Process Refined: On March 28, 2003, the United States Mint announced refinements to its process for selecting designs for the 50 State Quarters Program. 50 State Quarters coins released in 2005 will be the first quarters to reflect this new design process, with the exception of those states that have already begun the process.

The new design process will require states to submit to the United States Mint three to five design concepts in narrative formats — each including a narrative explanation of the design’s emblematic value. By contrast, the current design process requires states to submit these design concepts to the United States Mint as formal artistic renderings without narrative explanations.

Under the new design process, design concepts provided by the states will be rendered into appropriate, historic and aesthetically-pleasing designs by United States Mint sculptors/engravers and by artists from the Artistic Infusion Program. (For more information about the Artistic Infusion Program, see page 4 of this report.) State historians will help ensure that these renderings are historically accurate.

Also, under the new design process, each state will be given an opportunity to evaluate the artistic renderings of its candidate designs before they are made public. All renderings approved by the state will be required to undergo – as is currently required — additional reviews by the United States Mint, the Citizens Commemorative Coins Advisory Committee (CCCAC), the Commission of Fine Arts (CFA) and the Secretary of the Treasury. Then, the state will select one of the artistic renderings as a final design for its quarter. Lastly, each design must be approved by the Secretary of the Treasury, as is currently required.

The United States Mint is confident that the new design evaluation process, which will extend the design evaluation process from 18 months to 24 months, will improve communication between the Mint and the state. It will also enhance the Program’s educational, historic and artistic value. The United States Mint’s new design evaluation process was approved by Treasury Secretary Snow and reflects input from the numismatic and artistic communities, state officials, historians, educators and the public.

Partnerships

United States Mint/United States Postal Service (USPS) Partnership: On January 3, 2003, the United States Mint and the USPS announced the joint launch of the 50 State Quarters Greetings From America Series. The Series launch was unveiled by Director Fore, the USPS Chief Marketing Office Anita Bizzota, and “Miss America” for 2003 Erika Harold, at the Mall of America in Bloomington, Minnesota, on January 10, 2003. This event was attended by hundreds of shoppers and collectors. In April 2003, advertisements for the Card Set and Portfolio will run in Coin World, Numismatic News and USA Today.

The 50 State Quarters/Greetings From America Series consists of the following products:

  1. 50 State Quarters/Greetings From America Card Sets: Honors each of the five states that received a state quarter during a particular year. For each state, the following items are included in the Card Set: 1) The state’s quarter; (2) The state’s Greetings From America stamp; and (3) A baseball card-sized state card. The five states honored by the Card Set representing 2002 are Tennessee, Ohio, Louisiana, Indiana and Mississippi. Each Card Set retails for $27.99.
  2. 50 State Quarters/Greetings From America Portfolios: Honors each of the five states that received a state quarter in a particular year. For each state, the following items are included in the Portfolio: 1) The state’s quarter; (2) The state’s Greetings From America stamp; and (3) Scenic photographs of the state. The five states honored by the Portfolio representing 2002 are Tennessee, Ohio, Louisiana, Indiana and Mississippi. Each Portfolio retails for $29.99. A Portfolio honoring each of the five states singly is also available.

Card Sets and Portfolios representing 2002 are currently sold over the websites of the United States Mint and the USPS. Later this year, Card Sets and Portfolios representing 1999, 2000, 2001 and 2003 will be launched, and in future years, Card Sets and Portfolios representing 2004 through 2008 will be launched. The United States Mint and the USPS are currently exploring possibilities for establishing more joint ventures.

United States Mint/Bureau of Engraving and Printing (BEP) Partnership: The United States Mint is currently exploring possibilities for jointly launching products with the BEP. In addition, the United States Mint plans to purchase Lewis & Clark Buffalo Notes from the BEP, and then sell these Notes as part of a product that will be jointly marketed by the Mint and the National Archives and Records Administration.

Coin Inventory Management

The United States Mint and Federal Reserve are currently working together on several projects to improve coin production and inventory management. Among these projects is the development of an Extranet Coin Shipping Schedule application that will automate many laborious tasks involved in maintaining and updating the Mint’s schedules for coin shipments to the Federal Reserve. During the second quarter of FY 2003, the United States Mint and Federal Reserve developed instructions for using the application, arranged for users to access the application and prepared for the application to be pilot-tested by two Federal Reserve offices during April 2003. After this pilot-test is completed, the application will be rolled out to all Federal Reserve locations.

The United States Mint is also helping the Federal Reserve transfer previously circulated coins from Reserve Banks that have excess supplies to nearby Reserve Banks that need additional coins. This method of redistributing coins is helping lower the Federal Reserve’s orders for shipments of new coins from the United States Mint.

Supply Chain Management

The United States Mint is currently developing a fully integrated supply chain that uses best-in-business practices to address all segments of its supply chain — from raw material supplies to coin distribution. As part of this effort, the Supply Chain Management Workgroup, which includes representatives of the United States Mint, the Federal Reserve and suppliers of raw materials, is currently developing an Extranet application that will convey information between the United States Mint and its key suppliers.

During the second quarter of FY 2003, the United States Mint prepared for the third quarter FY 2003 implementation and testing of the first phase of this Extranet application, which will broadcast the production schedules of the Denver and Philadelphia Mints. During the second quarter of FY 2003, the United States Mint also prepared to implement the second phase of this Extranet application, which will convey information about material shipping schedules and supplier inventories between the United States Mint and its key suppliers.

Advertising Program

From November 29 to December 30, 2002, the United States Mint ran the first phase of its “Genuine United States Mint” television and print advertising campaign. This campaign, which was budgeted at about $2.5 million, was designed to promote sales of the full-line of United States Mint products and enhance the Mint’s brand and name recognition. During the campaign, the United States Mint acquired about 31,000 new customers; increased gross revenues by $2.6 million from sales of the Silver Eagle Proofs, Silver Proof Sets and Proof Set products; and sold out its gold products.

The next phase of the Genuine United States Mint Campaign will run through the end of FY 2003. It will begin with print advertisements for the 50 State Quarters Greetings From America Series and 2003 American Eagle Silver Proof Coins that will appear in USA Today, Newsweek and Time. These advertisements are budgeted at $548,830.

Release of Strategic Plan

During the second quarter of FY 2003, United States Mint Strategic Plan 2002-2007 was released. The Plan, which is subtitled One Team. One Vision, defines: 1) the United States Mint’s mission: to apply world-class business practices in making, selling and protecting our Nation’s coinage and assets; and 2) the Mint’s vision: to provide value to the American people, ensure integrity in our commitments and communication, and achieve world-class performance.

The unified, integrated approach outlined in United States Mint Strategic Plan 2002-2007 assigns responsibility to all Mint employees for serving the American people, meeting the expectations of the numismatic community and striving for excellence. This Plan also underscores the importance of promoting strong safety and security programs, safeguarding the United States Mint’s integrity and authenticity, enhancing the Mint’s educational efforts, exploring new ways to innovate and collaborate with other federal agencies, respecting and valuing co-workers, benchmarking against the best-in-business, and applying theoretical limits for ideal performance (i.e., zero lost time accidents for safety.)

United States Mint Strategic Plan 2002-2007 reflects input from the Treasury Department, the United States Mint’s executive team, representatives from all of the Mint’s Strategic Business Units and union representatives. In addition, United States Mint employees were invited to provide feedback via various forums, including all-hands meetings. Information about the plan was also shared with Congress, the numismatic community, coin collectors and the Federal Reserve.

Other Highlights

Commemorative Coins and Medals

2004 Lewis and Clark Bicentennial Commemorative Coin Design: On January 18, 2003, exactly 200 years after President Thomas Jefferson obtained $2,500 from Congress to fund the Lewis and Clark expedition, Director Fore unveiled the design of the 2004 Lewis and Clark Bicentennial Commemorative Silver Dollar. This event was held at the University of Virginia during a conference that was organized by the Thomas Jefferson Foundation, and served as the first of 15 “Signature Events” that will mark the bicentennial of the Lewis and Clark expedition.

The coin depicts Meriwether Lewis and William Clark on a stream bank planning another day of travel and exploration. The reverse side of the coin features an image of two feathers representing the many Native American Indian cultures that were touched by the Corps of Discovery Expedition, as well as a peace medal presented to the Native American Nations on behalf of President Jefferson.

2003 National Wildlife Refuge System Centennial Medal Series: On March 14, 2003, Director Fore unveiled the designs of five 2003 Centennial Medals commemorating the 100th anniversary of the National Wildlife Refuge System. A commission based on a percentage of the proceeds from sales of these medals, which will be available on a limited-edition basis, will benefit the National Wildlife Refuge System. Participants in the unveiling included Florida Governor Jeb Bush, U.S. Secretary of the Interior Gale Norton and Assistant Interior Secretary Craig Manson.

One side of each medal features an image of President Theodore Roosevelt, who was the founder of the National Wildlife Refuge System, along with the inscription “CELEBRATING A CENTURY OF CONSERVATION 1903 – 2003 THEODORE ROOSEVELT,” and the inscription “NATIONAL WILDLIFE REFUGE SYSTEM.” The reverse side of each medal features an image of a species of wildlife that is protected by the National Wildlife Refuge System.

2003 First Flight Centennial Commemorative Coin Program: The August 1, 2003, release of these gold, silver and clad coins will mark the 100th anniversary of the Wright Brothers’ historic flight at Kitty Hawk, North Carolina. A portion of the proceeds from sales of these coins will help pay for the upkeep of the Wright Brothers Monument in North Carolina. During the second quarter of FY 2003, the United States Mint’s candidate designs for the First Flight Commemorative Coin Program were approved by the Secretary of the Treasury.

2004 Thomas Alva Edison Commemorative Coin Program: Release of this silver dollar coin will mark the 125th anniversary of Thomas Edison’s invention of the practical light bulb. During the second quarter of FY 2003, the United States Mint’s candidate designs were reviewed by the CCCAC and the CFA. The release date for this program has not yet been determined.

2002 United States Military Academy (USMA) Bicentennial Commemorative Coin: March 16, 2003 marked the formal end of this coin program, which generated about $3.9 million in surcharges. These funds will help support the education and training of the USMA Corps of Cadets.

New Director of Public Affairs

The United States Mint’s new Director of Public Affairs is Becky Bailey. Ms. Bailey, who has more than 30 years of journalism and public affairs experience, previously served as Acting Director of Public affairs for the U.S. Consumer Product Safety Commission and as Communications Director in various Congressional offices. She also has been a national news correspondent.

Coin Redesign

Members of the American public, Congress and the coin collecting community have expressed interest in redesigning all of the Nation’s circulating coinage. The United States Mint believes that changing the designs of our coins would yield significant educational benefits, as well as underscore our national character, pride, history and heritage. However, the United States Mint also recognizes that any large-scale coin redesign effort would involve intensive collaboration with Congress, a broad cross-section of the American public and various individuals and experts who represent the historic, numismatic, artistic and other communities.

As of March 31, 2003, three bills were pending before Congress that address coin redesign on a relatively small scale. Each of these bills would: 1) authorize redesigns of the nickel throughout a three-year period beginning in 2003; and 2) return the image of President Thomas Jefferson to the obverse side of the nickel and return the image of Monticello to the reverse side of the nickel at the end of the program in 2006.

The United States Mint is continuing to communicate with Congress about coin redesign and looks forward to facilitating coin redesign, should Congress endorse such initiatives.

Citizens Commemorative Coin Advisory Committee

The Citizens Commemorative Coin Advisory Committee (CCCAC) is an organization that reviews proposed commemorative coin designs, including the quarters, on behalf of the Secretary of the Treasury, and identifies people, places or events for Congress to honor with commemorative coins. During the second quarter of FY 2003, the Secretary of the Treasury approved the appointments of three individuals to fill vacancies on the CCCAC – one to represent the interests of the general public; one specifically qualified in the arts/history/numismatics communities; and one to represent the interests of the United States Mint.

Second Quarter Audits

Office of Inspector General (OIG) Audits: During the second quarter of FY 2003, the OIG cancelled the following three proposed audits: 1) a review of United States Mint procurement policies, procedures and practices; 2) a multi-bureau review of disaster recovery exercises; and 3) a multi-bureau review of UNIX operating systems controls.

OIG expects to issue for review and comment its draft report on an audit of Treasury’s Cyber-Based Critical Infrastructure Protection in April 2003.

U.S. General Accounting Office (GAO) Audits: The GAO is currently reviewing differences among the budgetary, accounting and cost oversight methods used by the United States Mint for producing coins and those used by the BEP for producing paper currency.

GAO is continuing two security-related GAO audits that cover United States Mint activities: 1) an assessment of whether the United States Mint Police and the BEP’s Police Operations Division should continue to handle security services at each of their respective bureaus, or whether these services should be handled by other law enforcement organizations within the Treasury Department; and 2) a review of recruitment and retention issues that may have contributed to high turnover rates within the United States Mint Police.

World Money Fair and Mint Directors Conference

The United States Mint played a prominent role in the 2003 World Money Fair and meetings of the Mint Directors Conference (MDC) that were held in Basel, Switzerland, from January 31 to February 2, 2003. (The MDC is an international body that promotes the exchange of information about manufacturing, technical and financial issues among its membership of 42 national mints. Director Fore is currently Vice President of the MDC.)

At the MDC meetings, Director Fore reported on the United States Mint’s preparations for hosting the XXIII MDC, which will be held in San Francisco from March 18 to 23, 2004. As explained by Director Fore, these preparations include setting the conference agenda and schedule, arranging for presentations by 31 speakers from 15 national Mints and eight experts from academia and world-class numismatic companies, and organizing ancillary activities, such as tours of the San Francisco Mint.

Also at the MDC meeting in Basel, Director Fore proposed expanding the MDC membership to include broader representation of the international numismatic community. The MDC will vote on this proposal at the American Numismatic Association convention, which will be held in Baltimore, Maryland, from July 31 through August 3, 2003. During other sessions in Basel, the MDC decided to store only public information at the Coin Registrar Office, which houses data on the coin specifications of member nations, and to direct inquiries for non-public information directly to member countries. This strategy will encourage information exchange among member countries without compromising the security of coin specifications that could be used by counterfeiters. In addition, with guidance from Director Fore, the Royal Dutch Mint and the British Royal Mint launched the MDC Marketing Committee.

Education Initiatives

During the second quarter of FY 2003, the United States Mint Education Initiative met or exceeded several important benchmarks. For example, the 50 State Quarters Program Lesson Plans were downloaded from the United States Mint’s website more than 230,000 times. This figure matches the site’s record, which was achieved during the first quarter of FY 2003, and represents a 173 percent increase over the number of hits received during the second quarter of FY 2002. In addition, the United States Mint’s H.I.P. Pocket ChangeTM website was named “Editor’s Pick” by NEA Today, the journal of the National Education Association, the largest teachers’ union in the United States.

The offerings of the United States Mint’s H.I.P. Pocket Change website now include “State Quarter Day In The Classroom,” which is updated for each state quarter launch, as well as a Teacher’s Guide, which provides suggestions for incorporating coins and the Mint’s website materials into classroom activities. These and other educational materials provided by the United States Mint appeal to children, parents and teachers alike.

United States Mint Official Licensee Partnerships

By developing licensing agreements with distributors of coin products, the United States Mint gains entry into mass retail markets, expands its customer base outside of traditional channels, and enhances the branding of United States Mint products. In addition, through its licensing agreements, the United States Mint has — to date — earned over $2.09 million in royalties, which has helped to reduce the national debt.

In December 2002, the United States Mint’s licensing agreement with Hallmark concluded. However, the United States Mint will continue to receive royalties throughout the sell-off period, which may last up to one year after the conclusion of the licensing agreement.

The United States Mint currently maintains an active licensing agreement with H.E. Harris & Co, one of the largest distributors of stamp and coin collecting products in the country. United States Mint products that are licensed by H.E. Harris include coin albums, coin folders and other coin collecting productions that are educational and encourage coin collecting.

The United States Mint would like to create awareness and generate interest among other distributors of coin-related products in establishing licensing agreements with the United States Mint. To this end, during the second quarter of FY 2003, the United States Mint’s new Office of Licensing, which is housed within the Mint’s Sales and Marketing Strategic Business Unit, ran its first print advertisement. This advertisement, which appeared in License! Magazine, generated several inquiries that are currently being evaluated by the Mint.

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