*USPS Reports $199M Loss for FY 2000

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The U.S. Postal Service lost $199 million in fiscal year 2000, attributing much of it to unforeseen fuel expenses, the addition of 1.7 million new addresses and the reduction of 6,200 jobs.

Despite the gloomy numbers, the agency posted record productivity gains and an overall mail volume growth rate of 3.1 percent, or 6.2 billion additional pieces of mail. The USPS delivered a record 208 billion pieces of mail last year.

"We were successful in driving down costs to match lower-than-expected revenues and achieved year-end results that are near break-even," said Richard J. Strasser Jr., executive vice president and chief financial officer. He presented the information last week to the USPS' Board of Governors at its monthly meeting in Washington.

Highlights of the income statement, which was independently audited by Ernst & Young LLP, include:

• Operating revenues of $64.5 billion.

• Operating expenses of $63 billion.

• Income from operations of $1.5 billion.

• Net interest on deferred retirement and borrowings of $1.7 billion.

• Net loss of $199 million.

In accepting the audited financial statement, the board reiterated its call for postal reform. The board maintains that the laws governing the postal service, including pricing flexibility, have to change if the USPS is to continue maintaining universal service.

Other business included approval of funding for enhancements to flat-mail processing equipment; FY 2002 appropriation request to Congress; restoration of the ramp and maneuvering areas at the Milwaukee processing and distribution center; and expansion of the existing mail processing annex in Indianapolis.

The board also approved additional funding to add optical character readers and automated feeders to all model 1000 flat sorting machines. The equipment upgrade will enable the postal service to increase productivity by at least 12 percent, increase throughout by at least 20 percent and reduce staffing for this equipment by 22 percent.

"With the optical character reader now playing a key role," William J. Dowling, vice president of engineering, told the board, "customers who provide newspapers, magazines and other large flat-mail pieces will receive better service."

The USPS uses 350 FSM 1000s in major processing plants nationwide. Mail is fed manually into each FSM 1000 from four keying stations. At each station, an operator keys ZIP code information from each flat-mail piece, then places the flat into a slot on the machine. The mail is then sorted to one of 100 bins, where an employee removes full containers of flat mail and places them on an automated conveyor belt running under the machine.

By upgrading the equipment with both an automated feeder and an OCR, Dowling said, labor savings will be substantial, as manual keying and induction will no longer be necessary. The equipment upgrade is expected to start in July and be completed by May 2002.

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