*USPS Revenues Under Plan

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Richard Porras, the U.S. Postal Service's CFO, told the agency's Board of Governors at its monthly meeting in Washington yesterday that revenues in the second quarter of FY00 were $33 million under plan and expenses were $108 million over plan.

Porras said that part of the reason for the agency's poor performance can be attributed to the five million additional delivery points -- or addresses -- the company has accumulated since 1997. This will add nearly $1 billion in expenses this year, he said. In addition, Porras said increases in fuel costs are expected to add an additional $300 million to operate the Postal Service's 200,000 vehicles.

Of all the USPS mail categories, Porras said that Priority Mail continues to exceed revenue expectations

Porras said even though salary and benefits rose over last year's figures actual work hours are 1.3 percent lower than the previous year, and that programs to increase productivity have demonstrated solid improvement for the past three-quarters. Efforts will continue to reduce headquarters overhead expenses by $360 million, he said.

Meanwhile, Francia M. Smith, consumer advocate/vice president, USPS, also announced to board members that the USPS achieved an all-time high score of 94 percent for on-time delivery of local First-Class Mail for the second-quarter of FY00.

This represents a one-point increase compared to the same period last year, and marks the tenth consecutive quarter that national overnight delivery scores hit or surpassed the 93 percent mark.

The External First Class scores, independently compiled by PricewaterhouseCoopers, measures overnight First-Class Mail delivery from Dec. 4, 1999, through March 3, 2000. EXFC is a statistically valid measurement of collection box to mailbox delivery performance within an area covering 465 three-digit ZIP Codes, from which 90 percent of First-Class Mail is sent and 80 percent is received.

The Board also approved several capital spending programs

It approved spending $67,714,000 to expand the Los Angeles Bulk Mail Center by 222,325 square feet. The expansion project represents an opportunity to increase productivity and improve service for standard mail in Southern California and the southern portions of Arizona and Nevada.

It also approved $403.9 million for the next stage of the agency's Point of Sales (POS) ONE program, which is designed to improve customer service and access to information in local post offices. The rollout will add 13,504 new terminals to 4,615 retail sites by April 2001. Currently 31,000 POS ONE terminals have been deployed. Upon completion POS ONE will replace over 60,000 outdated retail terminals in 20,000 post offices. The funding will also be used to add postal satellite communication capability to more than 3,400 sites.
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