® NPPC Meeting December 5, 2013 USPS State of the Business Update

2 December 5, 2013 USPS Update– NPPC Meeting *Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities **Before accounting estimate change, RHB pre-funding, and non-cash adjustments to workers’ compensation liabilities. ***Newly available data on forever stamp usage resulted in a $1.3B reduction in Deferred Revenue – Prepaid Postage. Note:Delivery days were equal to FY2012. Retail had one additional weekday in FY2013 vs. FY2012. Financial Results Fiscal Year-End

3 December 5, 2013 USPS Update– NPPC Meeting Total Revenue FY12 vs. FY13 Year-End $ Billions -2.4% +3.0% +8.0% +1.2% +7.0% -1.4% -4.2% Volume: - 4.1% Volume: + 6.0% Volume: + 1.8% * Excludes $1.3B impact of change in accounting estimate for Deferred Revenue-Prepaid Postage.. $65.2 $66.0*

4 December 5, 2013 USPS Update– NPPC Meeting Unrestricted Cash Buildings & Equipment, net of depreciation Other assets Total Assets $ 2.3B $ 17.5B $ 1.8B $21.6B Retiree Health Benefits Workers’ Compensation Debt Accrued Compensation, benefits and leave Deferred Revenue* Other Total Liabilities** $16.8B $17.2B $15.0B $ 3.5B $ 3.6B $ 5.4B $61.5B ASSETS LIABILITIES Liabilities exceed assets by approx. $40 billion The USPS has only 35 cents of assets to cover each dollar of its liabilities * Newly available data on forever stamp usage resulted in a $1.3B reduction in Deferred Revenue – Prepaid Postage ** Under multi-employer accounting rules, there are approximately $51B in obligations not shown on the balance sheet.  Significant profits over years and legislation are needed to recover. A Deep Financial Hole September 2013

5 USPS Update– NPPC Meeting December 5, 2013 USPS Business Plan Strategic Initiatives ($ Billions) Savings By Initiative

6 December 5, 2013 USPS Update– NPPC Meeting  Network ● 143Plant Consolidations Completed in 2013 ● 657Mail Moves Completed in 2013  Retail ● 3.9 million Surveys Mailed Out ● 8,454 Community Meetings Held ● 7,985 Implementations to Date  Delivery ● DUO – Consolidated 2,510 Delivery Units in 2013 ● Eliminated 24,000 Delivery Routes since 2006, 1,437 in 2013 alone ● 60% of New Delivery Centralized * Our Actions Help Close the Gap Service has remained at high levels * Includes voluntary mode conversions

7 December 5, 2013 USPS Update– NPPC Meeting  Require USPS Health Care Plan  Resolves RHB Prefunding Issue  Refund FERS Overpayment  Adjust Delivery Frequency (6-Day Packages, 5-Day Mail)  Streamline Governance Model  Authority to Expand Products and Services  Require Defined Contribution System for Future Postal Employees  Instructions to Arbitrator  Reform Workers’ Compensation  Right to Appeal EEOC Class Action Decisions Key Legislative Goals To Regain Financial Self-Sufficiency

8 December 5, 2013 USPS Update– NPPC Meeting USPS Retiree Health Benefits Costs and Liabilities $80 Retiree Health Benefits Per Capita Costs USPS Retiree Health Benefits Liability 2014 PSRHBF - $Billions $100 $ $40 $20 $0 2.9 Current 49.1 Funded Liability Unfunded Liability $0 $2,000 $4,000 $6,000 $8,000 $6,233 Average Post 65 Healthcare Cost -FEHB $3,400 Post 65 Wrap Around Cost -Private Sector A&B + D Postal Retirees in FEHB

9 December 5, 2013 USPS Update– NPPC Meeting Revenue Growth Initiatives Will Accompany Cost and Efficiency Improvements Enhance Mail:  Create a multi-sensory experience for consumers  Relevant  Actionable  Functional  Creative  Hardcopy to digital that connects consumers to:  Web site,  Social media, or  Purchase point Grow Packages:  Close competitive gaps to level the playing field:  Competitive pricing  New Priority Mail features “Day-Certain” and insurance  Build advantages by targeting new solution for e-commerce:  Speedier service  Improved access that enables customers and consumers to use services more easily and effectively Digital Products: Extend the current USPS technology and data platform in ways that help better support the mailing industry and the American public.