® MTAC Revenue Generation Update Bob Bernstock President, Mailing and Shipping Services November 18, 2009

2 Confidential Property of USPS Agenda A.Financial Context B.The Four Prong Strategy C.Current Revenue Generation Initiatives D.Summary

3 Confidential Property of USPS Revenue Forecast Revenue  Revenue is projected to continue to decline  Innovative new revenue generating initiatives will partially offset the decline -$ 8.0 -$ 6.1

4 Confidential Property of USPS Profit Picture Cost Reductions and Net Loss  Despite multi-billion dollar cost savings, USPS has not been profitable Cost Reductions Net Loss

5 Confidential Property of USPS Four Prong Strategy A.Aggressively Reduce Costs  Match costs with revenues B.Seek Congressional Changes for near-term structural reform  Retiree Health Benefits Pre-payments  6 to 5 day delivery C.Aggressively Grow Revenue  Currently identified revenue generation initiatives D.Seek legal changes for long-term structural reform to enable product and pricing flexibility

6 Confidential Property of USPS Aggressively Grow Revenue A.Fewer, Bigger, Better  Top priorities have potential for at least $100 million revenue with profitable contribution B.Continuous Improvement  Invest in enablers that grow profitable volume or significantly reduce costs

7 Confidential Property of USPS Active MTAC Workgroups in 2010 A.Optimization of Preparation and Entry B.Service Measurement and Improvement C.Address Accuracy D.Intelligent Mail E.Growth

8 Confidential Property of USPS Strategic Issues Discussed A.Barcode Readability B.BME - SOX C.ACS Webinar Follow up D.Resolution Issue Tracking System

9 Confidential Property of USPS Revenue Initiatives: Active and Planned A.Current Revenue Generation  Pricing Incentives: i.e. First-Class Fall Incentive  Priority Mail Contracts  Priority Mail Flat Rate Box Campaign  USPS Consumer Products at Retail B.Current Enablers  Multi-Channel Integration Project C.Planned Revenue Generation  Product Samples  Enrollment Services  Hybrid Mail

10 Confidential Property of USPS Summary A.We know we can grow revenue because we have already begun to see results B.Revenue alone will not keep the USPS profitable C.We need the other three prongs as well 1.Aggressively cut costs 2.Gain Congressional Support to change retiree health benefits pre-payments and delivery requirements 3.Change the law for long term structural reform and greater flexibility

11 Confidential Property of USPS Tom Foti Marketing Mail Steve Monteith Transaction and Correspondence Mail Active and Planned Mailing Services Initiatives

12 Confidential Property of USPS Growing First-Class Mail ® Initiative Update

13 Confidential Property of USPS First-Class Mail Initiatives A.Pricing Stimulus  First-Class Mail Incentive B.Bills & Statements  Second Ounce Price Break  Rebate on Courtesy Reply Returns C.Marketing Mail  Business Class Mail D.Vote By Mail E.Technology  Scanning Platform

14 Confidential Property of USPS Workgroup 125: Opportunities A.Vote-by-Mail Product for Ballots B.Reply Card Scanning C.First-Class Mail Dropship/ Workshare Discount D.Discount/Rebate For Business Mailers That Generate Courtesy Reply Volume E.Weight Allowance for CRM F.First-Class Mail Lite G.Bulk Acceptance of Certified Mail

15 Confidential Property of USPS Growing Marketing Mail ® Initiative Update

16 Confidential Property of USPS Marketing Mail Initiatives A.Incentive Initiatives 1.Spring Incentive program 2.NSAs B.Market Segment Initiatives 1.Catalogs 2.Saturation Mail 3.Periodicals 4.Samples C.Small Business Initiatives