and postal customers from exposure to biohazardous material, to sanitize and screen the mail and to replace or repair postal facilities destroyed or damaged in New York City as a result of the September 11, 2001, terrorist attacks." Our use of the funds provided by this appropriation was contingent on the submission of an emergency preparedness plan to combat the threat of biohazards in the mail. We submitted the required Emergency Preparedness Plan in March 2002.

In August 2002, as set forth in our Emergency Preparedness Plan, Congress appropriated an additional $87 million to us for emergency expenses to further protect postal employees and customers from exposure to biohazardous material and to sanitize and screen the mail.

All three appropriations are to remain available until expended for purposes approved by Congress. We are required to submit quarterly expenditure plans on the obligation as well as continued annual updates of the Emergency Preparedness Plan. We have submitted all required plans and updates. Unspent funds that are not reallocated with Congressional approval are required to be returned to the United States Treasury.

The appropriations during 2003 and 2002 which have been expended or committed are as follows (dollars in millions):

	2003	2002
Operating expenses	$    –	$   16
Non-operating expenses	177	163
Capital equipment	189	38
Total	$366	$217

Detection and filtration systems are being tested and evaluated and will then be deployed in 2004 and beyond. The amounts expected to be spent in future years although we have not been appropriated the total amount are as follows (dollars in millions)

Building restoration	$  85
Biohazard detection system	223
Ventilation and filtration	632
Miscellaneous	18
$958

Our Emergency Preparedness expenditures are not all covered by the appropriations we received. The Emergency Preparedness expenses for the years ended September 30 are as follows (dollars in millions):

	2003	2002
Operating expenses:
Personnel costs	$  12	$  73
Total operating costs	$  12	$  73
Nonoperating expenses:
Safety measures	$  15	$ 128
Research and development	3	5
Building restoration	125	54
Miscellaneous	41	2
Total nonoperating expenses	$184	$189
	$196	$262

We recognize the appropriations as income in the year in which the related expenditure is recognized as an expense or when the government approves the reimbursement of a previously incurred expense. The Emergency Preparedness appropriations revenues recognized during the years ended September 30 are as follows (dollars in millions):

	2003	2002
Personnel costs	$   –	$  16
Safety Measures	$   –	$  21
Research and development	3	5
Building restoration	135	35
Miscellaneous	39	2
	$177	$179

As a result, the funds that had not been spent or reallocated as of September 30, 2003 and 2002 of $406 million and $583 million are reflected in our Balance Sheets as a non-interest bearing liability and have been reflected in the 2003 and 2002 Statements of Cash Flows as a financing activity.

The funds spent in 2002 were for irradiation equipment that did not meet our needs. With the approval of OMB, six of the eight machines valued at $17 million were transferred to other government and public agencies, and the manufacturer provided us with a more powerful machine at no additional cost. This new machine is valued at $14 million and is to be deployed at a future date.