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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
3 Confidential
-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
4 Confidential
-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
5 Confidential
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
6 Confidential
-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
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
7 Confidential
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)
$15 BillionDebt Limit
Forecasts
Notes for P/L and Cash Forecasts:• Excludes Non-cash Adjustments to Workers’ Compensation Liabilities; may impact net
income but not near-term cash flows.
9 Confidential
($
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)
($0.1B)
Available Liquidity / Cash at Month-EndWorkers’ Comp Payments in October
10 Confidential
($
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?