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USPS Moves Forward With Initiatives Essential To Transformation Plan

Monday, August 12, 2002

Press release from the issuing company

WASHINGTON, D.C. - During its monthly Board of Governors meeting today the Postal Service announced key elements of strategies in its Transformation Plan to secure mail service to every American at affordable rates well into the future. These initiatives include the availability of market-based pricing for its letter- and flat-mail tracking service, and an alliance with a private sector firm to develop and manage the electronic postmark. CONFIRM Tracking Beginning Sept. 22, 2002, a three-tiered flexible pricing structure for flat- and letter-mail tracking will enable senders or recipients to follow their mail to delivery. Vice President for Product Development, Nicholas Barranca, in making his presentation to the Board said, "CONFIRM not only responds to customer demand, but it is an important element of our Transformation Plan to secure the future of affordable, mail service to every American." Barranca said CONFIRM's innovative new pricing structure-subscription service rather than per-use charges, represents real value for customers and real value for Postal Service." (See news release # 58,"Postal Service's CONFIRM Tracking Service to Offer Innovative Market-Based Pricing Option" in the news release section of www.usps.com.) Electronic Postmark Alliance The Postal Service also announced that it signed a strategic alliance agreement with AuthentiDate, a subsidiary of AuthentiDate Holding Corporation, to be the provider of the Postal Service's Electronic Postmark (EPM) service. Under the terms of the agreement, AuthentiDate, Inc will provide the management, technology and support for the Postal Service's EPM service. EPM service offers a high level of integrity for electronic communications and transactions - similar to postmarking physical mail - in that it validates the existence of a document at a specific date and time. Finances Chief Financial Officer Richard Strasser presented to the Governors a cost and revenue report for FY 2001 history that demonstrated that letter mail volume alone has not provided sufficient revenue to fund postal operations. Costs are broken down into volume variable and fixed. Volume variable costs are those which are volume-dependent such as mail processing work hours; while fixed costs are those which are independent of mail volume, such as delivering to 115 million delivery points on a daily basis and maintaining a network of 38,000 retail outlets. Forty-three percent of expenses were fixed in 2001. Rates are set to cover volume variable costs, with each class of mail making a reasonable contribution to fixed costs. Fixed costs rise due to the continual growth of the delivery network: 1.7 million new delivery points are added each year. Revenues from mail volume growth have funded the growth in the delivery network. "We have relied on revenues from all mail product categories and services to pay for the cost of the expanding postal system," said Strasser. Since Postal Reorganization in 1971, the Postal Service has generated just over a trillion dollars in revenue. Expenses during that period have been within six-tenths of one percent of revenue. "This is a result of efficient operational management and prudent financial planning," noted Strasser. "Without the contributions of Priority Mail, Express Mail, Special Services and the other classes, we could not have met our break-even mandate on letter mail revenue alone." A comparison of the weighted average price of letter mail rates in Western Europe nations showed that Europeans paid 49 cents for letter mail service. In other business, a decision on the 2002 Borrowing Resolution was postponed until the September meeting to more closely examine the amount needed. With the Postal Service's action to hold down expenses and the freeze on capital expenditures, it is expected that the borrowing request will be less than that forecasted at the beginning of the fiscal year. Other news included funding approval for a new 34,251-square-foot Fairfax, Virginia Main Post Office. National Postal Forum Vice President for Service and Market Development John Wargo provided an informational briefing to the Board on the National Postal Forum (NPF). Held twice yearly, NPF is a conference and trade show designed to improve working relationships between the Postal Service and the mailing industry. The NPF program provides mailers with education and training on the most efficient and effective use of postal services. Moreover, NPF provides postal management and the mailing industry the opportunity to show case innovation and new applications for the mail. The exhibit area is the largest display of new technology, equipment and services available to the mailing industry. Wargo also highlighted key topics that will be presented at the upcoming Sept. 22-25, 2002, NPF in Boston: Transformation Plan Update, Enhancing the Value of Mail, Mailing Operations Management & Security. There will be four general sessions and more than 100 business sessions that will be organized by six mailing solution tracks.




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