1. August 2, 2006 Robert J. Pedersen Chief Financial Officer & Executive Vice President (A)

2. Financial Performance May Year-To-Date, FY 2006

3. FY 2006 – FINANCIAL PERFORMANCE Income Statement – May Year-To-Date ($ Millions) Actual Var Plan SPLY Revenue $49,150 +411 +0.8% $48,739 +3.8% Expense 47,505 [+281] +0.6% 47,224 +4.4% Net Income $1,646+130$1,516 $1,837 Escrow Allocation -$2,000 Deficiency After Escrow Allocation -$354 Numbers may not add due to rounding. [ ] = Unfavorable variance to plan.

4. FY 2006 – FINANCIAL PERFORMANCE +2.1%68.9B Standard +$599M -0.7%6.1B Periodicals +$23M +2.6%791M Package Svc. +$31M +5.6%640M Priority+$335M +3.0%38M Express +$38M Volume and Revenue – Change to SPLY– May YTD +$470M Revenue Change -0.6%66.4B First-Class ChangeFY 2006 Volume +0.9%144.1B Total Volume +$2B

5. FY 2006 – FINANCIAL PERFORMANCE Total Revenue – May Year-To-Date CommercialOtherRetail Total Revenue = $49.2B

6. FY 2006 – FINANCIAL PERFORMANCE Total Commercial Revenue – May YTD $148.1M Under Plan, -0.4%

7. FY 2006 – FINANCIAL PERFORMANCE Total Retail Revenue – May Year-To-Date $519.8M Over Plan, +4.4%

8. FY 2006 – FINANCIAL PERFORMANCE Other Retail Channels Revenue – May YTD ($ Millions) +38.1 $107.4 Click-n-Ship +55.1% +27.9 $631.4 Consignments +4.6% +72.5 $267.0 Automated Postal Ctrs (APC) +37.3% +207.0 $544.3 PC Postage +61.4% +168.4 $331.5 Stamps by Mail +103.3% -110.4 $322.1 Vending Machines -25.5% Actual % SPLY SPLY Var. +$608.0 $2,264.7 Total +36.7%

9. FY 2006 – FINANCIAL PERFORMANCE Expense Increase over FY 2005 – May YTD ($ Millions) Compensation & Benefits$1,206 3.3% Transportation 408 11.4% Other Fuel Related 174 16.7% Total Expense Increase $1,962 4.3% All Other 174 3.7% Consumer Price Index (CPI-U) 4.2% Increase % Change Operating Expenses

10. FY 2006 – FINANCIAL PERFORMANCE Total Factor Productivity – May YTD Total Factor Productivity 0.4% 0.9% Output Per Workhour 1.4% 1.3% Actual FY Plan

11. FY 2006 – FINANCIAL PERFORMANCE (% SPLY) CPI vs. CPI Excluding Energy

12. Rate Case Perspective

13. RATE CASE PERSPECTIVE Food For Thought n Historically low 1% contingency n Record low recovery of prior years’ losses n Ambitious cost reductions [$1 billion per year] n High ROI from investments n Very low inflation and expense growth n Solid economic growth

14. WRAP-UP Going Forward n Revenue above plan – keep it growing n Expenses above plan – hold the line n Review assumptions, risks, and forecasts n Development of Integrated Financial Plan for 2007

15. August 2, 2006 Robert J. Pedersen Chief Financial Officer & Executive Vice President (A)