1. FY 2008 Year End Review MTAC November 19, 2008 H. Glen Walker Chief Financial Officer & Executive Vice President

2. 2 2 External Environment  Massive deterioration in the housing and financial sectors  The decline in these sectors impacted many other areas of the economy, accelerating the decline  Inflation, driven by fuel prices, increased dramatically until the very end of the year

3. 3 3  Volume dropped 9.5 billion pieces from 2008  High Postal cost inflation driven by fuel prices and Wages Cost of Living Adjustments (COLA) Internal Environment

4. 4 4 USPS Response  Cost reduction of $2.2B vs. planned $1B  Record service levels  Record customer satisfaction levels  New marketing organization focused on profitable growth

5. 5 5 FY 2008 Financial Results [ ] = Unfavorable variance to SPLY Numbers may not add due to rounding. (Data in Millions) -$422$ 3,216$2,794 Operating Income (2) 417 71,757 72,174 Expense (1) [-5]$74,973$74,968 Revenue VarSPLYActual [-9,531]212,234202,703 Volume 0.6% 0.0% %SPLY [-4.5%] RHBF Payments Net Loss $5,600 -$2,806 (1) Excluding RHBF Payments (2) Before RHBF Payments $8,358 -$5,142 $2,336 -$2,758

6. 6 6 FY 2008 Volume Performance to SPLY 91.7B 99.1B 8.6B 1.6B 202.7B 1.7B201.1B

7. 7 7 Total Mail Volume

8. 8 8 First-Class Mail Volume

9. 9 9 Standard Mail Volume

10. 10 Periodicals Mail Volume

11. 11 First-Class Mail Volume By Shape Growth from SPLY

12. 12 Standard Mail Volume By Shape Growth from SPLY

13. 13 Expense Drivers of Variance To SPLY $ in Millions Compensation & Benefits-$601 Total Expense Variance Other Expenses 392 $417 Transportation459 Depreciation167

14. 14 Total Workhour Savings

15. 15 Outstanding Debt and Cumulative RHBF Payments

16. 16 FY 2008 Summary  Financially challenging year  Volumes down and cost inflation up driven by fuel and labor costs  Revenue flat on last year  Managed by reducing costs $2.2B  Focus on customer service  Organized and focused on growth opportunities

17. 17 FY 2009 Outlook  No economic recovery anticipated  Continued volume declines  8 billion pieces  Carryover impact to 2009 from rising inflation in 2008 as well as increases to wages and benefits  Focus on service to our customers and opportunities for growth  Focus on unprecedented across the board cost reductions

18. FY 2008 Year End Review MTAC November 19, 2008 H. Glen Walker Chief Financial Officer & Executive Vice President