Chief Financial Officer & Executive Vice President Financial Matters: 2011 Financial Results Board of Governors’ Open Session November 15, 2011 Joe Corbett Chief Financial Officer & Executive Vice President

Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

Revenue FY2010 – FY2011 Revenue $ Billions -2.0% +6.3% +2.9% -5.8%

Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

Operating Expenses Actual Compensation change from SPLY of $700m Salary Variances to SPLY: Mail Processing down $287m Cust. Serv. down $266m Merit/Incentive payments down $177m HQ/Other down $44m Plant Maint. down $37m Vehicle Services down $18m City Carrier over $58m Rural Carrier over $67m Benefits increase to SPLY of $500m Retiree Health Benefit over $193m Employee health benefit over $81m Retirement costs over $70m Workers’ Comp Cash Expense over $67m Transportation increase to SPLY of $500m Surface transportation is $139.9M over SPLY of which $145.7M is related to the increase in fuel prices.  Average diesel was $3.663 in FY11, compared to $2.887 in FY10; a 26.9% increase. Air transportation is $138.2M over SPLY, of which $97.1M is related to the increase in jet fuel/PPI rates.  Average PPI was 274.9 in FY11, compared to 210.9 in FY10; a 30.3% increase.  The additional $41M increase is related to contractual increases and additional handling fees. International: $245m increase to SPLY (Foreign Postal Transactions up $269m, remainder down $25m) Supplies & Services Actual = $2,259.9m SPLY = $2,235.9m, variance increase of only $24.0m * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

Workhour Changes September YTD – FY 2011 Workhours DELIVERY FREQUENCY Achieved Reductions of 34M Hours in 2011: Reduced 6,500 Delivery Routes Consolidated 1,400 Delivery Units Discontinued 360 Retail Facilities Implemented 50 Area Mail Processing Consolidations Budgeted Reduction: 41M Hours Difficulty Reducing Infrastructure Costs Lower than Necessary Attrition Highlights the Need for Major Infrastructure Changes Network Optimization – Plant Consolidations Retail Optimization – Alternative Access Delivery Optimization – Consolidation September 2011 YTD Reduction vs. 2010 = 34.1M hrs

Total Factor Productivity

Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

Integrating Required Annual Public Reports USPS publishes multiple public reports Documents respond to different legislative requirements Comprehensive Statement on Postal Operations (PRA, PAEA) Annual Report (PAEA) Annual Performance Report and Plan (GPRA) New Legislation (Government Performance and Results Modernization Act) and OMB guidance recommends report simplification and consolidation

Integrated Annual Public Report Key Content (Single Document) – to be published end of November Year in Review – Financial Highlights Core Strategies Board of Governors and Executive Leadership Team 2011 Financial Summary Operating Statistics Comprehensive Statement on Postal Operations - Summary of 2011 initiatives 2011 Annual Performance Report and 2012 Performance Plan

FY 2011 Financial Results Requesting approval of the following: 10-K and Financial Statements FY 2011 Comprehensive Statement, including the Annual Performance Report and Annual Performance Plan

2012 Integrated Financial Plan Board of Governors’ Open Session November 15, 2011 Joe Corbett Chief Financial Officer & Executive Vice President

FY 2012 Integrated Financial Plan Requesting approval of the following: FY 2012 Integrated Financial Plan FY 2013 Congressional Reimbursement (Appropriations Request)

Economic Indicators Primary Volume Drivers for Each Class of Mail Standard & Priority 53% Less Growth 24% Less Growth Standard First-Class 28% Less Growth Relatively Flat Source: Global Insight – August 2011

Statements of Operations FY 2011 FY 2012 In Billions IFP Revenue $ 65.7 $ 64.0 Expenses 67.9 67.0 Operating Income (Loss) $ (2.2) $ (3.0) RHB Pre-funding (Current Law) (11.1) Restructuring Charge* — (TBD) Non-cash Workers' Comp Adj. (2.9) (TBD) Net Income (Loss) $ (5.1) $ (14.1) Volume 167.9 158.0 * Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s

Revenue FY2006 – FY2012 Revenue $ Billions $75.0 $75.0 $72.8 $68.1 $67.1 $65.7 $64.0 SM FCM

Statements of Operations FY 2011 FY 2012 In Billions IFP Revenue $ 65.7 $ 64.0 Expenses 67.9 67.0 Operating Income (Loss) $ (2.2) $ (3.0) RHB Pre-funding (Current Law) (11.1) Restructuring Charge* — (TBD) Non-cash Workers' Comp Adj. (2.9) (TBD) Net Income (Loss) $ (5.1) $ (14.1) Volume 167.9 158.0 * Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s

Cumulative Savings vs. Workhours ($ Billions) Cumulative savings primarily from headcount reductions FY12 Savings $2.5 Billion FY12 Plan Reduction of 58M hours Total Workhours

Statements of Operations FY 2011 FY 2012 In Billions IFP Revenue $ 65.7 $ 64.0 Expenses 67.9 67.0 Operating Income (Loss) $ (2.2) $ (3.0) RHB Pre-funding (Current Law) (11.1) Restructuring Charge* — (TBD) Non-cash Workers' Comp Adj. (2.9) (TBD) Net Income (Loss) $ (5.1) $ (14.1) Volume 167.9 158.0 * Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s

Capital Commitments of $900M For 2012

Available Liquidity at Month-End FERS Impacts FY11 Actuals FY12 Forecast Min.1 month liquidity $7B FERS Withholding Pay FERS $0.6B $0.1B Assumes: No RHB pre-funding in 2011 or 2012 Pay FERS amounts withheld and resume contributions in December 22 22

Request for FY 2013 Congressional Reimbursement No request for Public Service Subsidy (cost of Universal Service Obligation) – range of $460M to $3.7B

FY 2012 Integrated Financial Plan Requesting approval of the following: FY 2012 Integrated Financial Plan FY 2013 Congressional Reimbursement (Appropriations Request)

Chief Operating Officer Quarter 4, Fiscal Year 2011 Service Performance and Customer Experience Megan J. Brennan Chief Operating Officer

Rapidly Changing Environment Quarter 4, Fiscal Year 2011 Rapidly Changing Environment Major Infrastructure Changes Challenges from the Elements Employees Delivered

Overnight 96.4 96.7 96.2 96.3 Single-Piece First-Class Target – 96.65 98 96 96.4 96.7 96.2 96.3 94 92 90 88 QTR 4 YTD FY11 SPLY Source: TTMS

2 - Day Single-Piece First-Class Target – 94.15 94.8 94.0 93.6 93.4 98 96 94 94.8 94.0 93.6 93.4 92 90 88 QTR 4 YTD FY11 SPLY Source: TTMS

3 to 5 Day Single-Piece First-Class Target – 92.85 93.7 92.6 91.6 91.2 98 96 94 93.7 92 92.6 90 91.6 91.2 88 QTR 4 YTD FY11 SPLY Source: TTMS

International Single-Piece First-Class FY11 SPLY Target – 94.00 92.7 95 92.7 90 90.6 SPLY 90.2 89.4 85 80 QTR 4 YTD FY11 Source: TTMS

Presort First-Class Presort First-Class Qtr 4 YTD 93.8 91.1 92.1 90.8 Target – 96.65 Target – 94.15 Target – 92.85 98 93 93.8 91.1 92.1 90.8 88 89.1 90.6 83 Overnight 2-Day 3-Day Qtr 4 YTD Source: TTMS There is no SPLY for Presort

Continuous Improvement Initiatives Process Improvement Continuous Improvement Initiatives 24 Hour Clock Execution Reduce Variation Quality Focus Leverage Service Diagnostic Tools Network Management

Customer Experience Measurement Quarter 4, Fiscal Year 2011 Customer Experience Measurement

Overall Experience Customer Experience Measurement 40 50 60 70 80 90 100 88.1 86.8 83.6 82.0 Residential Small Business QTR 4 SPLY 34

Residential Experience Customer Experience Measurement Residential Experience 40 50 60 70 80 90 100 91.2 91.2 90.0 89.4 83.9 82.3 62.7 60.0 Receiving Sending PO Visit Contact QTR 4 SPLY 35

Small Business Experience Customer Experience Measurement Small Business Experience 100 90 88.2 87.0 86.7 85.4 80 79.0 76.9 70 60 50 53.4 51.7 40 Receiving Sending PO Visit Contact QTR 4 SPLY 36

Continuous Improvement Initiatives CEM - Process Improvement Continuous Improvement Initiatives Ownership and Resolution of Issue Customer Experience Essentials Training Increased Use of Diagnostics

Summary Plan to Move at an Accelerated Pace Our Commitment q Plan to Move at an Accelerated Pace Infrastructure Changes to Continue q Our Commitment q Predictable Service q Industry Engagement q

Chief Operating Officer Quarter 4, Fiscal Year 2011 Service Performance and Customer Experience Megan J. Brennan Chief Operating Officer