CFO UPDATEMailers’ Technical Advisory

Committee Meeting

August 6, 2008

H. Glen WalkerChief Financial Officer &Executive Vice President

AgendaAgenda

Financial Results

Volume Trends

Summary

Financial ResultsFinancial Results

Preliminary Income Statement Qtr III, FY 2008

Preliminary Income Statement Qtr III, FY 2008

Numbers may not add due to rounding.(Data in Millions)

-$453-$1,098Net Loss

18,838 19,018Expense

$18,385$17,920Revenue

SPLYActual51,387 48,537Volume

1.0%

-2.5%

%SPLY -5.5%

Var2,850

-$465

180

-$645

Preliminary Income Statement Qtr III YTD, FY 2008

Preliminary Income Statement Qtr III YTD, FY 2008

Numbers may not add due to rounding.(Data in Millions)

$572-$1,705-$1,133Operating Loss

235 58,118 58,353Operating Expense

$807$56,413$57,220Revenue

VarSPLYActual-6,286 161,518155,232Volume

0.4%

1.4%

%SPLY -3.9%

Prior-Year Escrow

Net Loss

$0

-$1,133

-$2,958

-$4,663

$2,958

$3,530

Total Stamp SalesTotal Stamp Sales

121

409

292223 208

162 172126

176 179

275343

546 565

247

670

745

527 562649

609

708

867

671 580 497

423485

444

1088

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08

Forever Stamps Denominated Stamps

$ Millions

USPS PerspectiveUSPS Perspective

External Environment

Accelerated deterioration in the housing and financial industries

Government stimulus package had some positive impacts early in the quarter, but evaporated by June 2008

Economic forecasts continued to decline as the slowdown spread to many other sectors of the economy

Inflation, driven by fuel prices, increased dramatically

USPS Perspective USPS Perspective

How are we responding?

Reducing costs beyond the $1 billion annual target

Anticipating cost reductions of $2.0 - $2.5 billion for fiscal year 2008

Growing the shipping business and international services

Improving Service

USPS Perspective USPS Perspective

Improving Service

Record setting service performance in the 3rd quarter

Overnight: From 96% SPLY to 97% on time

Two Day: From 93% SPLY to 95% on time

Three Day: From 91% SPLY to 94% on time

4th Quarter Expectations

No recovery expected

Accelerate focus on cost reductions – 80% of cost is labor related

Significant loss for the year is anticipated

USPS Perspective USPS Perspective

Volume TrendsVolume Trends

Preliminary Qtr III 2008 VolumePreliminary Qtr III 2008 Volume

Volume % SPLY First-Class 22.3B -5.5%

Standard 23.2B -5.5%Periodicals 2.2B -3.3%

Priority 202M -5.9%

Package Svc 252M -2.7%

Total All Mail 48.5B -5.5%

Express 12M -14.3%

Preliminary Qtr III YTD FY 2008 VolumePreliminary Qtr III YTD FY 2008 Volume

Volume % SPLY First-Class 70.3B -4.2%

Standard 75.4B -3.7%Periodicals 6.6B -2.2%

Priority 661M -5.0%

Package Svc 850M -3.4%

Total All Mail 155.2B -3.9%

Express 37M -13.2%

Total Mail VolumeTotal Mail Volume

2.7% 2.4%

-1.5%

2.3% 2.3%

-0.6%-1.3%

-2.1%-3.0%-3.3%

-5.5%

-0.3%-0.1%

2.2%1.7%1.2%

5.4%

2.0%

3.5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3*

8 Quarter Moving Average Growth Rates

FY 2005 FY 2006 FY 2007FY 2004 FY 2008

% SPLY*Preliminary

First-Class Mail VolumeFirst-Class Mail Volume

0.3%

-4.0%

1.2%-0.1%

-2.5%-1.3%

-2.6%-3.9%

-3.1%

-5.5%

-0.6%-0.5%

-1.1%-2.4%

2.1%

-1.3% -0.6%

1.6%

-0.8%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3*

8 Quarter Moving Average Growth Rates

FY 2005 FY 2006 FY 2007FY 2004 FY 2008

% SPLY*Preliminary

Standard Mail VolumeStandard Mail Volume

-0.7%

9.3%

4.9%

-1.4%

-5.5%

-3.0%

1.2%

-0.9%

2.8%2.7%

0.2%

4.6%4.1%

7.9%7.6% 8.4%

4.4%

0.5%

-2.6%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3*

8 Quarter Moving Average Growth RatesFY 2005 FY 2006 FY 2007FY 2004 FY 2008

% SPLY*Preliminary

Periodicals VolumePeriodicals Volume

0.9%

-5.3%

-2.6%-4.3%

-3.3%

-3.0%

-2.2%

-0.5%

-0.6%

0.3% 0.1%0.2%

-0.7%-3.1%-3.5%

1.9%

-3.3%

-1.8%

1.2%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3*

8 Quarter Moving Average Growth RatesFY 2005 FY 2006 FY 2007FY 2004 FY 2008

% SPLY*Preliminary

First-Class Mail Volume Q3 YTD ShapeFirst-Class Mail Volume Q3 YTD Shape

Growth from SPLY

-3.4-2.6

-5.0-3.6

-15.3 -14.6-16.2

-15.3

QTR 1 QTR 2 QTR 3 YTD

Letters Flats

Standard Mail Volume Q3 YTD ShapeStandard Mail Volume Q3 YTD Shape

Growth from SPLY

4.32.6

-1.2

2.0

-13.1 -12.5 -13.3 -13.0

QTR 1 QTR 2 QTR 3 YTD

Letters Flats

Summary Summary

Economic environment has been very poor for fiscal year 2008

High inflation driven by fuel increases

Anticipated record high COLAs in September 2008 and March 2009

CFO UPDATEMailers’ Technical Advisory

Committee Meeting

August 6, 2008

H. Glen WalkerChief Financial Officer &Executive Vice President