2. Chief Financial Officer & Executive Vice President
Financial Matters:
2011 Financial Results
Board of Governors’
Open Session
November 15, 2011
Joe Corbett
Chief Financial Officer & Executive Vice President

3. Financial Results
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

4. Revenue FY2010 – FY2011
Revenue
$ Billions
-2.0%
+6.3%
+2.9%
-5.8%

5. Financial Results
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

6. Operating Expenses
Actual Compensation change from SPLY of $700m
Salary Variances to SPLY:
Mail Processing down $287m
Cust. Serv. down $266m
Merit/Incentive payments down $177m
HQ/Other down $44m
Plant Maint. down $37m
Vehicle Services down $18m
City Carrier over $58m
Rural Carrier over $67m
Benefits increase to SPLY of $500m
Retiree Health Benefit over $193m
Employee health benefit over $81m
Retirement costs over $70m
Workers’ Comp Cash Expense over $67m
Transportation increase to SPLY of $500m
Surface transportation is $139.9M over SPLY of which $145.7M is related to the increase in fuel prices.  Average diesel was $3.663 in FY11, compared to $2.887 in FY10; a 26.9% increase. Air transportation is $138.2M over SPLY, of which $97.1M is related to the increase in jet fuel/PPI rates.  Average PPI was in FY11, compared to in FY10; a 30.3% increase.  The additional $41M increase is related to contractual increases and additional handling fees.
International: $245m increase to SPLY (Foreign Postal Transactions up $269m, remainder down $25m)
Supplies & Services Actual = $2,259.9m SPLY = $2,235.9m, variance increase of only $24.0m
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

7. Workhour Changes September YTD – FY 2011
Workhours
DELIVERY FREQUENCY
Achieved Reductions of 34M Hours in 2011:
Reduced 6,500 Delivery Routes
Consolidated 1,400 Delivery Units
Discontinued 360 Retail Facilities
Implemented 50 Area Mail Processing Consolidations
Budgeted Reduction: 41M Hours
Difficulty Reducing Infrastructure Costs
Lower than Necessary Attrition
Highlights the Need for Major Infrastructure Changes
Network Optimization – Plant Consolidations
Retail Optimization – Alternative Access
Delivery Optimization – Consolidation
September 2011 YTD
Reduction vs = 34.1M hrs

8. Total Factor Productivity

9. Financial Results
* Before RHB Pre-Funding, Non-Cash Adjustments to Workers’ Compensation Liabilities & Contingency.

10. Integrating Required Annual Public Reports
USPS publishes multiple public reports
Documents respond to different legislative requirements
Comprehensive Statement on Postal Operations (PRA, PAEA)
Annual Report (PAEA)
Annual Performance Report and Plan (GPRA)
New Legislation (Government Performance and Results Modernization Act) and OMB guidance recommends report simplification and consolidation

11. Integrated Annual Public Report
Key Content (Single Document) – to be published end of November
Year in Review – Financial Highlights
Core Strategies
Board of Governors and Executive Leadership Team
2011 Financial Summary
Operating Statistics
Comprehensive Statement on Postal Operations
- Summary of 2011 initiatives
2011 Annual Performance Report and 2012 Performance Plan

12. FY 2011 Financial Results Requesting approval of the following:
10-K and Financial Statements
FY 2011 Comprehensive Statement, including the Annual Performance Report and Annual Performance Plan

13. 2012 Integrated Financial Plan
Board of Governors’
Open Session
November 15, 2011
Joe Corbett
Chief Financial Officer & Executive Vice President

14. FY 2012 Integrated Financial Plan
Requesting approval of the following:
FY 2012 Integrated Financial Plan
FY 2013 Congressional Reimbursement (Appropriations Request)

15. Economic Indicators Primary Volume Drivers for Each Class of Mail
Standard & Priority
53% Less Growth
24% Less Growth
Standard
First-Class
28% Less Growth
Relatively Flat
Source: Global Insight – August 2011

16. Statements of Operations
FY 2011
FY 2012
In Billions
IFP
Revenue $
65.7 $
64.0
Expenses
67.9
67.0
Operating Income (Loss) $
(2.2) $
(3.0)
RHB Pre-funding (Current Law)
(11.1)
Restructuring Charge* —
(TBD)
Non-cash Workers' Comp Adj.
(2.9)
(TBD)
Net Income (Loss) $
(5.1) $
(14.1)
Volume
167.9
158.0
* Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s

17. Revenue FY2006 – FY2012 Revenue $ Billions $75.0 $75.0 $72.8 $68.1
$67.1
$65.7
$64.0 SM
FCM

18. Statements of Operations
FY 2011
FY 2012
In Billions
IFP
Revenue $
65.7 $
64.0
Expenses
67.9
67.0
Operating Income (Loss) $
(2.2) $
(3.0)
RHB Pre-funding (Current Law)
(11.1)
Restructuring Charge* —
(TBD)
Non-cash Workers' Comp Adj.
(2.9)
(TBD)
Net Income (Loss) $
(5.1) $
(14.1)
Volume
167.9
158.0
* Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s

19. Cumulative Savings vs. Workhours
($ Billions)
Cumulative savings primarily from headcount reductions
FY12 Savings $2.5 Billion
FY12 Plan Reduction of 58M hours
Total Workhours

20. Statements of Operations
FY 2011
FY 2012
In Billions
IFP
Revenue $
65.7 $
64.0
Expenses
67.9
67.0
Operating Income (Loss) $
(2.2) $
(3.0)
RHB Pre-funding (Current Law)
(11.1)
Restructuring Charge* —
(TBD)
Non-cash Workers' Comp Adj.
(2.9)
(TBD)
Net Income (Loss) $
(5.1) $
(14.1)
Volume
167.9
158.0
* Equipment and Facilities Impairments, Workers’ Comp, Unemployment, and VERA’s

21. Capital Commitments of $900M For 2012

22. Available Liquidity at Month-End FERS Impacts
FY11 Actuals
FY12 Forecast
Min.1 month liquidity $7B
FERS Withholding
Pay FERS
$0.6B
$0.1B
Assumes: No RHB pre-funding in 2011 or 2012
Pay FERS amounts withheld and resume contributions in December 22 22

23. Request for FY 2013 Congressional Reimbursement
No request for Public Service Subsidy (cost of Universal Service Obligation) – range of $460M to $3.7B

24. FY 2012 Integrated Financial Plan
Requesting approval of the following:
FY 2012 Integrated Financial Plan
FY 2013 Congressional Reimbursement (Appropriations Request)

25. Chief Operating Officer
Quarter 4, Fiscal Year 2011
Service Performance
and
Customer Experience
Megan J. Brennan
Chief Operating Officer

26. Rapidly Changing Environment
Quarter 4, Fiscal Year 2011
Rapidly Changing Environment
Major Infrastructure Changes
Challenges from the Elements
Employees Delivered

27. Overnight 96.4 96.7 96.2 96.3 Single-Piece First-Class Target – 96.6598 96
96.4
96.7
96.2
96.3 94 92 90 88
QTR 4
YTD
FY11
SPLY
Source: TTMS

28. 2 - Day Single-Piece First-Class Target – 94.15 94.8 94.0 93.6 93.498 96 94
94.8
94.0
93.6
93.4 92 90 88
QTR 4
YTD
FY11
SPLY
Source: TTMS

29. 3 to 5 Day Single-Piece First-Class Target – 92.85 93.7 92.6 91.6 91.298 96 94
93.7 92
92.6 90
91.6
91.2 88
QTR 4
YTD
FY11
SPLY
Source: TTMS

30. International Single-Piece First-Class FY11 SPLY Target – 94.00 92.795
92.7 90
90.6
SPLY
90.2
89.4 85 80
QTR 4
YTD
FY11
Source: TTMS

31. Presort First-Class Presort First-Class Qtr 4 YTD 93.8 91.1 92.1 90.8
Target – 96.65
Target – 94.15
Target – 92.85 98 93
93.8
91.1
92.1
90.8 88
89.1
90.6 83
Overnight
2-Day
3-Day
Qtr 4
YTD
Source: TTMS
There is no SPLY for Presort

32. Continuous Improvement Initiatives
Process Improvement
Continuous Improvement Initiatives
24 Hour Clock Execution
Reduce Variation
Quality Focus
Leverage Service Diagnostic Tools
Network Management

33. Customer Experience Measurement
Quarter 4, Fiscal Year 2011
Customer Experience Measurement

34. Overall Experience Customer Experience Measurement 40 50 60 70 80 90
100
88.1
86.8
83.6
82.0
Residential
Small Business
QTR 4
SPLY 34

35. Residential Experience
Customer Experience Measurement
Residential Experience 40 50 60 70 80 90
100
91.2
91.2
90.0
89.4
83.9
82.3
62.7
60.0
Receiving
Sending
PO Visit
Contact
QTR 4
SPLY 35

36. Small Business Experience
Customer Experience Measurement
Small Business Experience
100 90
88.2
87.0
86.7
85.4 80
79.0
76.9 70 60 50
53.4
51.7 40
Receiving
Sending
PO Visit
Contact
QTR 4
SPLY 36

37. Continuous Improvement Initiatives
CEM - Process Improvement
Continuous Improvement Initiatives
Ownership and Resolution of Issue
Customer Experience Essentials Training
Increased Use of Diagnostics

38. Summary Plan to Move at an Accelerated Pace Our Commitmentq
Plan to Move at an Accelerated Pace
Infrastructure Changes to Continue q
Our Commitment q
Predictable Service q
Industry Engagement q

39. Chief Operating Officer
Quarter 4, Fiscal Year 2011
Service Performance
and
Customer Experience
Megan J. Brennan
Chief Operating Officer