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Postal Service Plans $600 Million Net Income in FY 2003

Press release from the issuing company

$800 million debt reduction planned WASHINGTON, D.C. - On September 6th, Chief Financial Officer and Executive Vice President Richard Strasser presented the Postal Service's integrated financial plan for fiscal year 2003 at a meeting of the Board of Governors, covering operating, capital investment and financing plans. The plan calls for a net income of $600 million for the year and the first reduction in outstanding debt since 1997. For FY 2003, revenue is projected to grow to $70.4 billion, $3.9 billion or 5.9 percent above FY 2002's estimated revenue of $66.5 billion. Mail volume is projected to grow a modest 1.9 percent to 205.7 billion pieces, but will still be below FY 2000 volume levels. Expenses are budgeted at $69.8 billion, a 3.2 percent growth over estimated expenses for FY 2002 of $67.7 billion. "We plan to reduce workhours by 30 million and reduce complement by another 12,000 employees, while at the same time adding 1.65 million daily deliveries," Strasser said. "This will be the fourth year in a row we will have reduced workhours and complement." Cumulative workhour reductions since FY 2000 will total 141 million and the number of career employees will have been reduced by 55,000 over the same period. The FY 2003 budget includes about $1 billion in cost reductions. Total Factor Productivity, which measures output or workload in comparison to the resources used to produce the output, is projected to increase by 0.7 percent. The plan also projects a 1.9 percent increase in Output per Work Hour, which measures workload (mail volume and deliveries) compared to the resources used to produce it. "Seventy-six percent of total expenses are personnel expenses. Within that amount is $5.1 billion in Civil Service deferred retirement liabilities and annuitant health benefits costs. No other federal agency is required to pay these costs," noted Strasser. "The FY 2003 capital investment plan totals $2.5 billion and reflects continued constraints on new capital commitments," said Strasser. "Projects will be considered on a case-by-case basis to address high-growth areas, equipment that provides reduced operating costs, and crucial infrastructure improvements." "The FY 2003 budget projects the first reduction in debt since 1997," Strasser said. "Cash flow from operations will be $2.8 billion based mainly on net income and depreciation expenses. With capital cash outlays at $2 billion, we will be able to reduce our outstanding debt by $800 million." "The $600 million net income in FY 2003 is less than a one percent margin," Strasser warned. "If the economic recovery stalls, significant negative impact to postal finances could result, especially if there is no recovery in advertising mail volume.