**USPS Posts Dismal December; Carriers Release 4th-Quarter Financials

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The U.S. Postal Service's revenues for December fell short of budget by 3 percent, and some observers say the agency could lose $2.5 billion in fiscal 2001.

Two other carriers, United Parcel Service and Emery Worldwide, released fourth-quarter figures that reflected a slowdown in the U.S. economy.

While the numbers for the USPS' accounting period four are estimates, they show that revenues for the period -- Dec. 2-29 -- were $5.47 billion, or 3 percent below budget. Expenses were $5.52 billion -- $75.6 million above plan -- and the net loss for the period totaled $294 million, about $238 million below plan. Year to date, the cumulative loss now totals $419.9 million, compared with a planned profit of $332 million.

In addition, reports said that in the same period last year, the USPS showed a $1.05 billion profit; this year it is showing an $87 million loss. Moreover, according to some postal pundits, this dismal quarter is an indication that the USPS could finish fiscal 2001 with a $2.5 billion loss.

"The postal service had a bad quarter, no doubt about it, and it probably can be attributed in part to a slowing economy," said Alan Robinson, president of Direct Communications Group, Silver Spring, MD, a consulting firm focusing on the postal and parcel market.

"But the problems they are having appear to be more systemic. Revenue has been coming in at about 2 percent below plan since 1998, and if revenue for the rest of the year continues to fall 3 percent below plan, this can be the most difficult year the USPS has had in quite a long time."

Meanwhile, United Parcel Service, Atlanta, reported a profit slightly above expectations and cut its earnings forecast for 2001 because of the slowing economy.

The company -- which reported in December that the slowing U.S. economy was cutting into its domestic package delivery volumes -- said it expected earnings per share to grow 9 percent to 11 percent this year, down from a previous estimate in the mid-teens.

o UPS also said revenue growth would likely be 8 percent to 10 percent this year. In December, it said it expected to post revenue growth of 10 percent, barring further slowing in the economy.

"Our rate of growth this year will not be at the same pace as we've seen in the last few years domestically," said Scott Davis, UPS' chief financial officer. "But we do expect to grow, and at a rate faster than the domestic package market."

For the three months that ended Dec. 31, UPS earned $724 million, compared with $661 million in the year-ago period.

UPS' global volume -- a key measure of financial health in the package delivery industry -- averaged 14.7 million pieces a day in the quarter, up 3.6 percent from the year-ago period.

UPS averaged volume of about 1.3 million pieces a day for its entire international service, a 13.3 percent gain from the previous year. Volumes for the company's U.S. domestic package business averaged about 13.5 million pieces a day, a 2.8 percent rise over the year-ago period.

o Emery Worldwide reported full-year operating income of $40.3 million, compared with $75.5 million in 1999. It also reported operating income of $28.4 million and revenues of $2.6 billion, up 8 percent from $2.4 billion in 1999. Emery is a subsidiary of CNF Inc., Palo Alto, CA.

For the full year 2000, Emery's North American revenue per day was flat, while international revenue per day rose 20 percent. North American air freight tonnage per day was down 8 percent, but international tonnage per day grew 12 percent. North American yield grew 9 percent.

"Emery's results remain disappointing and were exacerbated by the cooling economy in the U.S. in the fourth quarter," CNF president/CEO Gregory L. Quesnel said. "Emery is focusing on service consistency, yield enhancement, market sizing and cost reductions, which are expected to improve results."

The numbers exclude USPS Priority Mail activities, which are now classified as discontinued operations. The USPS last year canceled its contract with Emery to transport Priority Mail.

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