®

H. Glen WalkerChief Financial Officer &Executive Vice President

FINANCIAL UPDATE

Mailers’ Technical Advisory Committee Meeting

August 1, 2007

FINANCIAL UPDATE FINANCIAL UPDATE

+0.2%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

SPLYChange

Qtr 3YTD

-1.3%

+0.8%

-2.8%

-0.5%

-0.5%

-0.9%

-1.3%

51.4B

258M

215M

14M

2.3B

24.6B

23.6B

Qtr 3

SPLYChange

Volume Performance

FINANCIAL UPDATE FINANCIAL UPDATE First-Class Mail Volume

2.1%

-1.3%

1.2%-0.1%

-1.3%-0.6%

0.3%

-4.0%

1.6%

-0.8%

-2.5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY 2005 FY 2006 FY 2007

% SPLY 8 Quarter Moving Average Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE

Priority Mail Volume

2.5%

6.1%4.7%

0.7% 0.7%2.6%

-2.8%

-5.3%

1.4%

10.3%

7.5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY 2005 FY 2006 FY 2007

% SPLY 8 Quarter Moving Average Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE

Express Mail Volume

4.0%5.7%

-3.3% -3.1%

0.6%1.3%

-0.5%-0.2%-0.9%

2.2%

4.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY 2005 FY 2006 FY 2007

% SPLY 8 Quarter Moving Average Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE

Periodicals Volume

-3.3%

0.1%

-5.3%

-1.8%

0.9%

-0.7%-0.5%

-2.2%

-0.6%

0.3%0.2%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY 2005 FY 2006 FY 2007

% SPLY 8 Quarter Moving Average Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE Standard Mail Volume

9.3%

4.1% 4.4%

0.5% 0.2%

4.9%4.6%

2.7% 2.8%1.2%

-0.9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3FY 2005 FY 2006 FY 2007

% SPLY 8 Quarter Moving Average Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE

Package Services Volume

-1.4%

3.3% 3.5%

-0.9%

1.1%

3.3%0.8%

-2.7%-3.5%

3.8%

7.8%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY 2005 FY 2006 FY 2007

% SPLY 8 Quarter Moving Average Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE

-4.1%

-5.6%

-2.3%

-7.1%

-11.9%-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2007Q1 2007Q2 April May June

Total First Class Flat Volume versus SPLY: Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE Total First Class June 2007 Volume versus SPLY:

Growth Rates

-9.4%

-11.9%-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

Parcels Flats

FINANCIAL UPDATE FINANCIAL UPDATE

4.2%

-0.5%

0.0%

-7.2%

-12.2%-14.0%-12.0%-10.0%-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%

2007Q1 2007Q2 April May June

Total Standard Flat Volume versus SPLY: Growth Rates

FINANCIAL UPDATE FINANCIAL UPDATE

Total Standard Weight per Piece: Growth Rates

-0.7%

0.8%

1.8%2.4%

1.6%2.1%

3.5%

-1.1%

-3.3%

1.4%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

2007Q1 2007Q2 April May June

Letters Flats

FINANCIAL UPDATE FINANCIAL UPDATE Total Standard June 2007 Volume versus SPLY: Growth

Rates0.8%

-12.2%-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

Letters Flats

FINANCIAL UPDATE FINANCIAL UPDATE Total Standard Rate Changes R2006-1

Letters Flats

Regular 4.3% 22.9%

Nonprofit Regular1.8% 36.4%

ECR 3.9% 7.4%

Nonprofit ECR -3.4% 14.7%

FINANCIAL UPDATE FINANCIAL UPDATE Total First-Class Rate Changes R2006-1

Letters 5.2%

Flats 17.2%

Parcels 21.1%

FINANCIAL UPDATE FINANCIAL UPDATE

Total All Mail

Package Svc.

Priority

Express

Periodicals

Standard

First-Class

50.4B

283M

192M

12M

2.1B

24.9B

22.5B

Qtr 4

-2.7%

-3.9%

-10.1%

-12.4%

-4.0%

-2.8%

-2.8%

SPLYChange

Quarter 4 Volume Outlook

FINANCIAL UPDATE FINANCIAL UPDATE Total Mail Volume per Workhour

150146145142137133129128123121119116116

0

20

40

60

80

100

120

140

160

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007*FY

* YTD June

22 Million New Delivery Points Added During This Period

FINANCIAL UPDATE FINANCIAL UPDATE

Total Workhours – March 31 thru July 20

-1200

-1000

-800

-600

-400

-200

0

Wk27 Wk28 Wk29 Wk30 Wk31 Wk32 Wk33 Wk34 Wk35 Wk36 Wk37 Wk38 Wk39 Wk40 Wk41 Wk42

Th

ou

san

ds

SPLY Variance

FINANCIAL UPDATE FINANCIAL UPDATE

Total Overtime – March 31 thru July 20

-700

-600

-500

-400

-300

-200

-100

0

Wk27 Wk28 Wk29 Wk30 Wk31 Wk32 Wk33 Wk34 Wk35 Wk36 Wk37 Wk38 Wk39 Wk40 Wk41 Wk42

Th

ou

san

ds

SPLY Variance

FINANCIAL UPDATE FINANCIAL UPDATE

Total Factor Productivity

Qtr 3 YTD Qtr 3

+1.4%Total Factor Productivity+1.8%

-1.2%Resources-2.1%

+0.3%Workload-0.2%

Qtr 3 YTD SPLY

+0.5%

+0.6%

+1.2%

FINANCIAL UPDATE FINANCIAL UPDATE FY 2007 Debt through Quarter 3 YTD

Beginning Debt $2.1

Payment of Debt -$2.1

Ending Debt $0.0

($ Billions)

®

H. Glen WalkerChief Financial Officer &Executive Vice President

FINANCIAL UPDATE

Mailers’ Technical Advisory Committee Meeting

August 1, 2007