® 1 DISCUSSION DRAFT (Here to Serve Our Customers) USPS Financial Update and a Plan for Our Future (Here to Serve Our Customers) October 13, 2011 Joe Corbett

2 DISCUSSION DRAFT August 2011 Preliminary Financial Results

3 DISCUSSION DRAFT Preliminary Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities

4 DISCUSSION DRAFT Preliminary Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities

5 DISCUSSION DRAFT Preliminary Revenue 11 Months Ended August 31, 2011 ($ Billions) $2.1 $0.2 $0.5

6 DISCUSSION DRAFT Preliminary Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities

7 DISCUSSION DRAFT Workhour Changes August YTD – FY M 138.2M 366.4M 163.3M 133.5M M 54.3M August YTD Reduction = 31.3M hours 153.8B

8 DISCUSSION DRAFT Preliminary Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities

9 DISCUSSION DRAFT Preliminary Financial Results * Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingent Liabilities

® 10 DISCUSSION DRAFT USPS Financial Future

11 DISCUSSION DRAFT Plan to Profitability Revenue Declines $ in Billions Total Revenue Relentless First-Class Mail Migration

12 DISCUSSION DRAFT Additional Actions Needed to Reduce Cost $ in Billions Current Expense Outlook Cumulative Losses of $154B Total Revenue

13 DISCUSSION DRAFT Aggressive Cost Reduction Needed $ in Billions Current Expense Outlook Cumulative Losses of $154B $20B Shortfall in FY2015 $20B USPS Plan to Cut Expenses by FY2015 Total Revenue

14 DISCUSSION DRAFT $20B Total Postal Plan to Profitability $20B Cost Eliminated by FY2015

15 DISCUSSION DRAFT Future Network Network Optimization

16 DISCUSSION DRAFT Potential Decrease in Processing Facilities Through 2013 Processing Facilities

17 DISCUSSION DRAFT  President’s Plan on Deficit Reduction stabilizes USPS finances for next several years -USPS supports because it gives USPS sufficient operating cash for next two years -USPS recommends adoption of USPS Health Care Program  House Continuing Resolution: Defers Retiree Health Benefit payment until November 18  Divergent House and Senate postal legislation Possible Legislative Paths Current State of Play

18 DISCUSSION DRAFT President's Plan for the USPS  Restructure retiree health benefit pre-funding to reduce near- term postal payments  Provide USPS w/ refund over two years of $6.9 billion surplus contributed to Federal Employee Retirement System  Reduce USPS operating costs by giving USPS authority to reduce mail delivery from 6 to 5 days  Allow USPS to increase collaboration w/ state and local governments; e.g. non-postal products and to mail beer and wine  Allows USPS ability to raise postage rates above current price cap USPS Supports President's Plan for USPS Reform

19 DISCUSSION DRAFT Here to Serve Our Customers