May 17, 2006May 17, 2006

Robert J. PedersenChief Financial Officer &

Executive Vice President (A)

FY 2006 – FINANCIAL PERFORMANCESummary: October 1, 2005 – March 31, 2006Summary: October 1, 2005 – March 31, 2006

• Revenue/Volume Growing

• Expense Inflation Increasing

• Small Net Gain After Escrow

FY 2006 – FINANCIAL PERFORMANCEIncome Statement – March Year-to-DateIncome Statement – March Year-to-Date

($ Millions)

Actual Var PlanPlan SPLY

Revenue $37,177 +288 +0.8% $36,889 +2.9%

Expense 35,603 [+141] +0.4% 35,462 +4.2%

Net Income $1,574 +147 $1,427 $1,957 Escrow Allocation -$1,500

Net Gain After Escrow Allocation +$74 [ ] = Unfavorable variance to plan.

Numbers may not add due to rounding.

FY 2006 – FINANCIAL PERFORMANCEExpense Increase over FY 2005 – Qtr 2 YTD

($ Millions)

Compensation and Benefits $827 3.1%

Increase % Change

Transportation 319 11.7%

Other Fuel Related 144 18.7%

Total All Expense $1,447 4.2%

All Other 158 4.5%

FY 2006 – FINANCIAL PERFORMANCE

3.6%

2.4%

0.2% 0.4%

7.0%

-0.8%-0.1%

-2.7%

4.8%

0.2%

-1.3%

3.9% 3.6%

1.5%

First-Class Standard Priority Express Packages Periodicals Total

Plan Actual

Volume Compared to SPLY – Quarter 2 YTDVolume Compared to SPLY – Quarter 2 YTD

FY 2006 – FINANCIAL PERFORMANCE

-1.7% -2.9%-1.1% -1.3% -0.6%

1.4%

-3.8%

0.3%2.1%

-2.4%-0.5%

-3.2%-0.6%

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

First-Class Mail Volume

FY 2003 FY 2004 FY 2005 FY 2006

% SPLY 8 Quarter Moving Average Growth Rates

FY 2006 – FINANCIAL PERFORMANCEStandard Mail Volume

2.7% 3.1%

-0.7%

7.7%9.3%

4.1% 2.7%4.4%4.6%

0.5%

8.4%7.9%

-0.1%

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

FY 2003 FY 2004 FY 2005 FY 2006

% SPLY 8 Quarter Moving Average Growth Rates

FY 2006 – FINANCIAL PERFORMANCEPriority Mail Volume

-15.1%

-0.3%-2.7%

2.5% 2.6%

10.2%

-14.0%

6.1%7.5%4.1%

3.2%

-4.9%

-10.3%

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

FY 2003 FY 2004 FY 2005 FY 2006

% SPLY 8 Quarter Moving Average Growth Rates

FY 2006 – FINANCIAL PERFORMANCEExpress Mail Volume

-4.9%-3.1%

0.6% 1.3% 2.2%

-12.1%-12.3%

4.0%4.0%5.7%

-2.9%-1.4%

-6.9%

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

FY 2003 FY 2004 FY 2005 FY 2006

% SPLY 8 Quarter Moving Average Growth Rates

FY 2006 – FINANCIAL PERFORMANCEPackage Services Volume

6.9%

12.3%

0.2%

-1.4%

3.3% 3.4%2.8%3.4%

7.8%3.8%

2.3%

-4.7%

2.4%

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

FY 2003 FY 2004 FY 2005 FY 2006

% SPLY 8 Quarter Moving Average Growth Rates

FY 2006 – FINANCIAL PERFORMANCEPeriodicals Volume

-3.0%

0.9%

-0.7%

0.2%

-3.5%-3.6%-2.2% -3.3%

0.2%

-1.8%

1.9%

-3.1%-3.6%

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

FY 2003 FY 2004 FY 2005 FY 2006

% SPLY 8 Quarter Moving Average Growth Rates

FY 2006 – FINANCIAL PERFORMANCEVolume – Quarter 2 YTD

108.9B 109.2B

Actual

256M

0.2%

SPLY

Total Revenue up 2.9%

FY 2006 – FINANCIAL PERFORMANCEDeliveries – Quarter 2 YTD, FY 2006Deliveries – Quarter 2 YTD, FY 2006

Deliveries 145.1MDeliveries 145.1M

Change From SPLY Change From SPLY 1.9M 1.9M

FY 2006 – FINANCIAL PERFORMANCEProductivity – Quarter 2 YTD

Change from FY 2005

Total Factor (TFP) 0.3%

Output Per Workhour 1.2%

May 17, 2006May 17, 2006

Robert J. PedersenChief Financial Officer &

Executive Vice President (A)