August 2, 2006 Robert J. Pedersen Chief Financial Officer & Executive Vice President (A)

Financial Performance May Year-To-Date, FY 2006

FY 2006 – FINANCIAL PERFORMANCE Income Statement – May Year-To-Date ($ Millions) Actual Var Plan SPLY Revenue $49, % $48, % Expense 47,505 [+281] +0.6% 47, % Net Income $1, $1,516 $1,837 Escrow Allocation -$2,000 Deficiency After Escrow Allocation -$354 Numbers may not add due to rounding. [ ] = Unfavorable variance to plan.

FY 2006 – FINANCIAL PERFORMANCE +2.1%68.9B Standard +$599M -0.7%6.1B Periodicals +$23M +2.6%791M Package Svc. +$31M +5.6%640M Priority+$335M +3.0%38M Express +$38M Volume and Revenue – Change to SPLY– May YTD +$470M Revenue Change -0.6%66.4B First-Class ChangeFY 2006 Volume +0.9%144.1B Total Volume +$2B

FY 2006 – FINANCIAL PERFORMANCE Total Revenue – May Year-To-Date CommercialOtherRetail Total Revenue = $49.2B

FY 2006 – FINANCIAL PERFORMANCE Total Commercial Revenue – May YTD $148.1M Under Plan, -0.4%

FY 2006 – FINANCIAL PERFORMANCE Total Retail Revenue – May Year-To-Date $519.8M Over Plan, +4.4%

FY 2006 – FINANCIAL PERFORMANCE Other Retail Channels Revenue – May YTD ($ Millions) $107.4 Click-n-Ship +55.1% $631.4 Consignments +4.6% $267.0 Automated Postal Ctrs (APC) +37.3% $544.3 PC Postage +61.4% $331.5 Stamps by Mail % $322.1 Vending Machines -25.5% Actual % SPLY SPLY Var. +$608.0 $2,264.7 Total +36.7%

FY 2006 – FINANCIAL PERFORMANCE Expense Increase over FY 2005 – May YTD ($ Millions) Compensation & Benefits$1, % Transportation % Other Fuel Related % Total Expense Increase $1, % All Other % Consumer Price Index (CPI-U) 4.2% Increase % Change Operating Expenses

FY 2006 – FINANCIAL PERFORMANCE Total Factor Productivity – May YTD Total Factor Productivity 0.4% 0.9% Output Per Workhour 1.4% 1.3% Actual FY Plan

FY 2006 – FINANCIAL PERFORMANCE (% SPLY) CPI vs. CPI Excluding Energy

Rate Case Perspective

RATE CASE PERSPECTIVE Food For Thought n Historically low 1% contingency n Record low recovery of prior years’ losses n Ambitious cost reductions [$1 billion per year] n High ROI from investments n Very low inflation and expense growth n Solid economic growth

WRAP-UP Going Forward n Revenue above plan – keep it growing n Expenses above plan – hold the line n Review assumptions, risks, and forecasts n Development of Integrated Financial Plan for 2007

August 2, 2006 Robert J. Pedersen Chief Financial Officer & Executive Vice President (A)