1. ® H. Glen Walker Chief Financial Officer & Executive Vice President FINANCIAL UPDATE Mailers’ Technical Advisory Committee Meeting May 16, 2007

2. FINANCIAL UPDATE Income Statement – Qtr 2, FY 2007 ActualSPLYVAR%SPLY Volume 53,02053,320-300 -0.6% Revenue$18,354$18,652-$298 -1.6% Expense 18,549 17,806743 4.2% Income from Operations-$195$846-$1,041 HB Fund Expense1,350---1,350 CSRS Refund-335----335 Supp. Payment -132 ----132 Net Income/Loss-$1,078 $846-$1,924 (Data in Millions)Numbers may not add due to rounding

3. FINANCIAL UPDATE Income Statement – Qtr 2 YTD, FY 2007 ActualSPLYVAR%SPLY Volume110,114109,1159990.9% Revenue$38,069$37,177$8922.4% Expense 37,064 35,6021,4624.1% Income from Operations$1,005$1,574-$569 Prior Year Escrow2,958---2,958 HB Fund Expense2,700---2,700 CSRS Refund-715----715 Supp. Payment -129 ----129 Net Income/Loss-$3,809$1,574-$5,383 (Data in Millions)Numbers may not add due to rounding

4. FINANCIAL UPDATE Volume Performance – Qtr 2 YTD, FY 2007 Volume YTD SPLY Change YTD Qtr 2 SPLY Change Qtr 1 SPLY Change First-Class49.8B-1.3%-2.5%-0.1% Standard53.7B+3.2%+1.2%+4.9% Periodicals 4.4B-3.7%-2.2%-5.3% Express 28M-1.6%-0.2%-3.1% Priority481M-2.2%-5.3%+0.7% Package Svc.621M-0.7%-2.7%+1.1% International452M+6.0%+9.6%+3.0% Total110.1B+0.9%-0.6%+2.3%

5. FINANCIAL UPDATE First-Class Mail Volume FY 2005FY 2006FY 2007 % SPLY 8 Quarter Moving Average Growth Rates

6. FINANCIAL UPDATE Standard Mail Volume FY 2005FY 2006FY 2007 % SPLY 8 Quarter Moving Average Growth Rates

7. FINANCIAL UPDATE Periodicals Volume FY 2005FY 2006FY 2007 % SPLY 8 Quarter Moving Average Growth Rates

8. FINANCIAL UPDATE Revenue Variance to SPLY YTD Qtr 1Qtr 2 Commercial$800-$5$795 Retail374-231143 Other 17 -62 -45 Total Revenue Var.$1,191-$298$893 ($ in Millions)

9. FINANCIAL UPDATE Total Factor Productivity Labor Productivity Resources Usage Workload +1.3% +2.3% +0.6% +1.3% -0.7% -1.1% +0.5% -0.5% Qtr 2 YTDQtr 2

10. FINANCIAL UPDATE Variance to Workhour Savings – YTD March Variance PlanActual Salaries & Benefits Savings Workhour Savings $328 9.1 $533 14.8 $205 5.7 Less Labor Mix Savings -105 (Data in Millions) Total Salaries & Benefits Variance to Plan $100 *National Day of Mourning = 3.4M Workhours ($122M)

11. FINANCIAL UPDATE Expense Drivers to SPLY Variance Salaries & Benefits:Qtr 2 YTD General Increases +$823 Mar / Sep 2006 COLA Workhour & Rate Mix Savings Other Total Salaries & Benefits Transportation: Highway Transportation Air Transportation Other +488 - 433 +31 +$909 +$73 +191 +69 Total Transportation +$333 ($ in Millions)

12. FINANCIAL UPDATE Statements of Cash Flow Beginning of Year Six Months Ended March 31, 2007 Six Months Ended March 31, 2006 Cash $997 $930 Cash Flow from Operations 3,264 3,071 Capital Cash Outlays (941) (1,086) Free Cash Flow 2,323 1,985 Net Cash used in Financing Activity (2,098) (8) Net Change in Cash 225 1,977 Cash at End of Period$1,222$2,907 ($ in Millions)

13. FINANCIAL UPDATE FY 2007 Debt through Qtr 2 YTD Beginning Debt $2.1 Payment of Debt-$2.1 Ending Debt$0.0 ($ Billions)

14. FINANCIAL UPDATE Risks to Outlook for Quarters 3 and 4  Economy  Potential Impact from May Rate Increase  Labor Agreements / Workhour Reductions  Workers Compensation

15. FINANCIAL UPDATE Outlook for Quarters 3 and 4 Risk Level Plan Revenue Medium to High $37.3B Expense* Medium Net Loss Medium to High -$1.8B Volume Medium to High -1.7% to SPLY $39.1B *Includes Legislative Changes

16. FINANCIAL UPDATE Actions to Manage Risks  Workhour Controls  Reduce Overtime  Full Use of Negotiated Labor Flexibility  Tight Cost Control

17. FINANCIAL UPDATE Summary of Costs From New Law – FY 2008 Eliminate CSRS Contribution $1.5 Eliminate Escrow Payment 3.6 Scheduled Payment to RHBF (5.6) Removal of Interest Income on Escrow (0.3) Additional SOX and Administrative (0.2) Direct Impact of Reform on Net Income$(1.0)

18. ® H. Glen Walker Chief Financial Officer & Executive Vice President FINANCIAL UPDATE Mailers’ Technical Advisory Committee Meeting May 16, 2007