CONFIDENTIAL – For Internal Review and Discussion Only

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

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

4 Revenue $ Billions Revenue FY2010 – FY % +2.9% +6.3% -2.0%

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

6 Operating Expenses * Before RHB Pre-Funding, Non-Cash Adjustments to Workers Compensation Liabilities & Contingency.

7 Workhour Changes September YTD – FY M 150 M 399 M 177 M 148 M 1,149 M 59 M 168 B DELIVERY FREQUENCY September 2011 YTD Reduction vs = 34.1M hrs

8 Total Factor Productivity

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

10 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

11 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

12 Requesting approval of the following: 1.10-K and Financial Statements 2.FY 2011 Comprehensive Statement, including the Annual Performance Report and Annual Performance Plan FY 2011 Financial Results

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

14 Requesting approval of the following: 1.FY 2012 Integrated Financial Plan 2.FY 2013 Congressional Reimbursement (Appropriations Request) FY 2012 Integrated Financial Plan

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

16 Statements of Operations In Billions FY 2011FY 2012 IFP Revenue65.7$ 64.0$ Expenses Operating Income (Loss)(2.2)$ (3.0)$ RHB Pre-funding (Current Law)(11.1) Non-cash Workers' Comp Adj.(2.9) Net Income (Loss)(5.1)$ (14.1)$ Volume Restructuring Charge* (TBD) * Equipment and Facilities Impairments, Workers Comp, Unemployment, and VERAs (TBD)

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

18 Statements of Operations In Billions FY 2011FY 2012 IFP Revenue65.7$ 64.0$ Expenses Operating Income (Loss)(2.2)$ (3.0)$ RHB Pre-funding (Current Law)(11.1) Non-cash Workers' Comp Adj.(2.9) Net Income (Loss)(5.1)$ (14.1)$ Volume Restructuring Charge* (TBD) * Equipment and Facilities Impairments, Workers Comp, Unemployment, and VERAs (TBD)

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

20 Statements of Operations In Billions FY 2011FY 2012 IFP Revenue65.7$ 64.0$ Expenses Operating Income (Loss)(2.2)$ (3.0)$ RHB Pre-funding (Current Law)(11.1) Non-cash Workers' Comp Adj.(2.9) Net Income (Loss)(5.1)$ (14.1)$ Volume Restructuring Charge* (TBD) * Equipment and Facilities Impairments, Workers Comp, Unemployment, and VERAs (TBD)

21 Capital Commitments of $900M For 2012

22 Min.1 month liquidity $7B Available Liquidity at Month-End FERS Impacts $0.6B FY11 ActualsFY12 Forecast Assumes: No RHB pre-funding in 2011 or 2012 Pay FERS amounts withheld and resume contributions in December Pay FERS FERS Withholding $0.1B

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

24 Requesting approval of the following: 1.FY 2012 Integrated Financial Plan 2.FY 2013 Congressional Reimbursement (Appropriations Request) FY 2012 Integrated Financial Plan

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

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

27 Single-Piece First-Class Overnight Source: TTMS QTR 4YTD FY11SPLY Target – 96.65

28 Single-Piece First-Class 2 - Day Source: TTMS QTR 4YTD FY11SPLY Target – 94.15

29 Single-Piece First-Class 3 to 5 Day Source: TTMS QTR 4YTD FY11SPLY Target – 92.85

30 Single-Piece First-Class International Source: TTMS QTR 4YTD FY11 SPLY Target –

31 Presort First-Class Source: TTMS There is no SPLY for Presort Overnight2-Day3-Day Qtr 4YTD Target – Target – Target – 92.85

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

Quarter 4, Fiscal Year 2011 Customer Experience Measurement

Overall Experience ResidentialSmall Business QTR 4SPLY Customer Experience Measurement

35 Residential Experience ReceivingSendingPO VisitContact Customer Experience Measurement QTR 4SPLY 91.2

36 Small Business Experience ReceivingSendingPO VisitContact Customer Experience Measurement QTR 4SPLY

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

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

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