® Financial Update Board of Governors Open Session August 8, 2007

Financial Update 2 Income Statement – Qtr 3, FY 2007 ActualSPLYVAR%SPLY Volume 51,39052, % Revenue$18,399$17, % Expense 18,179 17, % Income from Operations$220$81$139 HB Fund Expense1, ,350 CSRS Refund Supp. Payment Net Income/Loss-$659 $81-$739 (Data in Millions)Numbers may not add due to rounding

Financial Update 3 Income Statement – Qtr 3 YTD, FY 2007 ActualSPLYVAR%SPLY Volume161,504161, % Revenue$56,468$55,064$1, % Expense 55,243 53,4091, % Income from Operations$1,225$1,655-$430 Prior Year Escrow2, ,958 HB Fund Expense4, ,050 CSRS Refund-1, ,122 Supp. Payment Net Income/Loss-$4,469$1,655-$6,123 (Data in Millions)Numbers may not add due to rounding

Financial Update 4 Revenue Variance to SPLY YTD Qtr 1Qtr 2Qtr 3 Commercial$800-$5$149$944 Retail Other Total Revenue Var.$1,191-$299$512$1,404 ($ in Millions)

Financial Update %161.5BTotal All Mail -0.3%879MPackage Svc. -2.4%696MPriority -1.3%42MExpress -2.7%6.7BPeriodicals +1.8%78.3BStandard -1.3%73.4BFirst-Class SPLY Change Qtr 3 YTD -1.3% +0.8% -2.8% -0.5% -0.9% -1.3% 51.4B 258M 215M 14M 2.3B 24.6B 23.6B Qtr 3 SPLY Change Volume Performance

Financial Update 6 Expense Variance to SPLY ($ in Millions) Qtr 3 Transportation +$39 Qtr 3 YTD +$448 Total Expense Variance Other Foreign Postal Settlements Salaries & Benefits +$ $1, ,008 Supplies & Services

Financial Update 7 Total Factor Productivity Qtr 3 YTD Qtr %Total Factor Productivity+1.8% -1.2%Resources-2.1% +0.3%Workload-0.3% Qtr 3 YTD SPLY +0.5% +0.6% +1.2%

Financial Update 8 Total Mail Volume per Workhour FY * YTD June 22 Million New Delivery Points Added During This Period

Financial Update 9 Total Workhours – March 31 thru July 20

Financial Update 10 Total Overtime – March 31 thru July 20

Financial Update 11 Statements of Cash Flows ($ in Millions) Cash Unrestricted Cash Flows from Operations: Cash Flows from Investing Activities Free Cash Flow Cash Flows from Financing Activities Net Change in Cash Cash at End of Period Nine Months Ended June 30, 2007 Nine Months Ended June 30, 2006 $ 997$ 930 3,8493,745 (1,743) (1,713) 2,1062,032 (2,100) --- (2,859)1,939 $1,096$2,869 93(93) Payment of Debt (2,958) --- Payment of 2006 Escrow to HB Fund Beginning of Year: Cash Restricted 2,958---

Financial Update 12 FY 2007 Debt through Quarter 3 YTD Beginning Debt $2.1 Payment of Debt -$2.1 Ending Debt $0.0 ($ Billions)

Financial Update 13 Risks to Outlook for Quarter 4  Economy  Impact from May Rate Increase  Labor Agreements  Workers Compensation Liability

® Financial Update Board of Governors Open Session August 8, 2007