1 Confidential

The United States Postal Service

Q2, FY2011 Financial UpdateMay 25, 2011

Joe Corbett

Chief Financial Officer & Executive Vice President

2 Confidential

-3.3%

-14.6%

-8.9%

-1.3%

1.5%

-3.0% -2.2%

-6.3%-5.5%

-9.4%

-14.8%-12.7%

-3.2%

0.7%

-3.1%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2

Total Mail Volume

8 Quarter Moving Average Growth Rates% SPLY

FY 2008 FY 2009 FY 2010

Mail Volume Changes by Quarter

FY 2011

Note: FY 2010 and FY 2011 include impact of 2010 census volume

Excl. impact of 2010Census

Pro-Forma

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-10.1%

-6.8%

-6.0%

-7.6%-6.9%-6.5%-7.4%

-10.0%

-7.2%

-5.0%

-8.2%

-2.7%-3.4%

-6.3% -5.7%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2

First-Class Mail

8 Quarter Moving Average Growth Rates% SPLY

FY 2008 FY 2009 FY 2010 FY 2011

Mail Volume Changes by Quarter

Note: FY 2010 and FY 2011 include impact of 2010 census volume

Excl. impact of 2010Census

Pro-Forma

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-11.2%

8.6%

-2.7%

1.6%

4.6%

0.7%

8.9%

-19.5%-19.7%

-5.6%-3.0%

-6.1%

-17.7%

-10.9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Standard (Advertising) Mail

8 Quarter Moving Average Growth Rates% SPLY

FY 2008 FY 2009 FY 2010 FY 2011

Mail Volume Changes by Quarter

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Shipping Services Mail

2.8%

-7.6%

-4.9%-4.8%

-2.0%

-15.8%-15.1%

2.4%1.6%

4.7%3.4%

-2.1%

2.6%

-10.5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

% SPLY

FY 2008 FY 2009 FY 2010 FY 2011

Mail Volume Changes by Quarter

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-0.7%

-4.5%

-6.3%

-2.1%

0.5%

-0.3%

-2.0%-2.7%

-10.0%

-5.0%

0.0%

5.0%

Volume

Mail

Processing

Customer

Services City Delivery

Rural

Delivery Postmasters Other Total

(% o

f P

rio

r Y

ear)

Workhour and Volume Changes March YTD – FY 2011

87.4B

87.4B

111.9M111.9M 77.2M77.2M 201.5M201.5M87.8M

74.7M74.7M 582.3M582.3M

29.3M

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March 2011 Financial Results

Six Months thru March 2011 (Billions)

Prelim

2011 FY

2010

Revenue $34.1 $35.1Expenses (34.2) (34.1)

Operating Income (Loss)* (0.1) 1.0Retiree Hlth. Benefits Pre-Funding (2.8) (2.8)Workers Comp: Actuarial & Claims (0.7) (0.3)Workers Comp: Discount Rate Adj. 1.0 0.3

Net Income (Loss) ($2.6) ($1.9)

Volume (Pieces) 87.4 87.9* Before RHB Pre-Funding & Non-Cash Adjustments to Workers’ Compensation Liabilities

8 Confidential

2011-2012 Forecasts

US Dollars in Billions 2011 IFP 2011 2012

Mail Volume (pieces) 173 168 165

Revenue 67.7 65.5 65.5

Expenses (Net of $1.7B Add'l Mgmt Action Effects in '12) (68.6) (68.3) (68.4)

Op. Income (Loss) before RHB (0.9) (2.8) (2.9)

RHB Pre-Funding (5.5) (5.5) (5.6)

Net Income (Loss) Before Legislative Changes (6.4) (8.3) (8.5)

Net (Debt) / Cash Before Legislative Changes (17.7) (19.3) (26.6)

$15 BillionDebt Limit

Forecasts

Notes for P/L and Cash Forecasts:• Excludes Non-cash Adjustments to Workers’ Compensation Liabilities; may impact net

income but not near-term cash flows.

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($

Bill

ion

s)

(14.0)

(12.0)

(10.0)

(8.0)

(6.0)

(4.0)

(2.0)

0.0

2.0

4.0

6.0

8.0

10.0

Oct

-10

No

v-10

Dec

-10

Jan

-11

Feb

-11

Mar

-11

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-11

Dec

-11

Jan

-12

Feb

-12

Mar

-12

Ap

r-12

May

-12

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

($ B

illio

ns)

Debt at $15 B limit for FY 2011. Excludes Restricted Cash (Inspection Service’s Recoveries) of approximately $200M

FY11 Fcst: $8.3 B loss

($4.3B)

Min.1 month liquidity $7B FY12 Fcst: $8.5 B loss

($11.6B)

($5.6B)

$1.5B Oct cash requirements

$5.5B RHB pre-funding pmt

No RHB Pre-funding Pmts of $5.5B in

Sep 2011 and $5.6B in Sep 2012$1.8B$1.2B

($13.1B)

($0.5B)

($2.0B)

(See Forecast Note on Slide 8)

($0.1B)

Available Liquidity / Cash at Month-EndWorkers’ Comp Payments in October

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($

Bill

ion

s)

(14.0)

(12.0)

(10.0)

(8.0)

(6.0)

(4.0)

(2.0)

0.0

2.0

4.0

6.0

8.0

10.0

Oct

-10

No

v-10

Dec

-10

Jan

-11

Feb

-11

Mar

-11

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-11

Dec

-11

Jan

-12

Feb

-12

Mar

-12

Ap

r-12

May

-12

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

($ B

illio

ns)

Debt at $15 B limit for FY 2011. Excludes Restricted Cash (Inspection Service’s Recoveries) of approximately $200M

FY11 Fcst: $8.3 B loss

($4.3B)

Min.1 month liquidity $7B FY12 Fcst: $8.5 B loss

($11.6B)

($5.6B)

$1.5B Oct cash requirements

$5.5B RHB pre-funding pmt

No RHB Pre-funding Pmts of $5.5B in

Sep 2011 and $5.6B in Sep 2012($0.1B)

$1.8B$1.2B

($13.1B)

($0.5B)

($2.0B)

(See Forecast Note on Slide 8)

($7.1B)

($1.1B)

Revenue decline accelerates, gas prices and inflation continue to increase

Available Liquidity / Cash at Month-EndWorkers’ Comp Payments in October

11 Confidential

Current Efforts to Ensure Liquidity

• Ongoing operational efficiencies and discretionary cost reductions

• Savings of $1.7B from Additional Management Actions in 2012:

Labor contract negotiations, transportation, facility consolidations, administrative realignment, service standards, and other

• Additional route reductions in progress

• Refund of FERS overpayment

• Five-Day Delivery

• RHB Restructuring

Management Actions

Requests for Congressional Action

Need to protect the Business and the Brand….Possible Default?