Open Session

Board of Governors
Friday, February 8, 2013

Quarter I of Fiscal Year 2013

Financial Results

Open Board Session

February 8, 2013

Financial Results
Quarter 1 YTD - 3 Months
(Billions)

Revenue Expenses *
Separation Incentive Costs

Operating Income (Loss)*

Retiree Health Benefits Pre-Funding Workers' Comp. Fair Value Adj. Workers' Comp. Other Non-Cash Adj.

FY 2013 $17.7 17.5 0.1 0.1 (1.4) 0.2 (0.2) ($1.3) 10 43.5

FY 2012 $17.7 17.5 0.2 (3.1) (0.1) (0.3) ($3.3) 11 43.6

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Net Income (Loss) Liquidity (Days Cash) Volume (pieces)

* Before RHB pre-funding and non-cash adjustments to workers compensation liabilities.

Revenue FY12 Q1 vs. FY13 Q1

$ Billions

-0.1%
-6.3%

+4.7%

Volume Up: 4.0%

+3.1%

Volume: +3.6%

-3.1%

Volume: -4.5%

Financial Results
Quarter 1 YTD - 3 Months
(Billions)

Revenue Expenses *
Separation Incentive Costs

Operating Income (Loss)*

Retiree Health Benefits Pre-Funding Workers' Comp. Fair Value Adj. Workers' Comp. Other Non-Cash Adj.

FY 2013 $17.7 17.5 0.1 0.1 (1.4) 0.2 (0.2) ($1.3) 10 43.5

FY 2012 $17.7 17.5 0.2 (3.1) (0.1) (0.3) ($3.3) 11 43.6

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Net Income (Loss) Liquidity (Days Cash) Volume (pieces)

* Before RHB pre-funding and non-cash adjustments to workers compensation liabilities.

Operating Expenses
Quarter I YTD - 3 months
(Billions)

FY 2013 $9.6 3.8 1.8 0.5 0.6 1.2 $17.5 (1)

FY 2012 9.6 3.8 1.8 0.6 0.5 1.2 17.5 (3)

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Compensation Benefits Transportation Depreciation Supplies & Services Rent, Utilities & Other Operating Expenses *
Workhour Reductions (Millions)

* Before RHB pre-funding, non-cash adjustments to workers compensation liabilities.

Financial Results
Quarter 1 YTD - 3 Months
(Billions)

Revenue Expenses *
Separation Incentive Costs

Operating Income (Loss)*

Retiree Health Benefits Pre-Funding Workers' Comp. Fair Value Adj. Workers' Comp. Other Non-Cash Adj.

FY 2013 $17.7 17.5 0.1 0.1 (1.4) 0.2 (0.2) ($1.3) 10 43.5

FY 2012 $17.7 17.5 0.2 (3.1) (0.1) (0.3) ($3.3) 11 43.6

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Net Income (Loss) Liquidity (Days Cash) Volume (pieces)

* Before RHB pre-funding and non-cash adjustments to workers compensation liabilities.

2012 & 2013 Liquidity Days of Operating Cash on Hand

No Retiree Health Benefits Pre-Funding included ($11.1B in 2012 and $5.6 B in 2013)
Days
13 12 11 10 9 8 7 6 5 4 3 2 1 0 (1)
Oct-12 Nov-11 Nov-12 Oct-11 Aug-12 Aug-13 Feb-13 Feb-12 Jun-12 Dec-11 Jun-13 Dec-12 Jan-12 Jan-13 Apr-13 Sep-12 May-12 May-13 Sep-11 Mar-12 Mar-13 Sep-13 Apr-12 Oct-13 Jul-12 Jul-13

FY 2012

FY 2013

Actual Current Forecast

Three months in 2013 have liquidity below $1.3B (5 days of operating cash on hand)

Liquidity includes unrestricted cash plus available borrowing, up to $15B limit Days of Operating Cash based on average operating costs disbursed per day ~$265M

Mid-October Balances shown - Low points after annual Workers Compensation payments to DOL

Quarter 1, Fiscal Year 2013 Service Performance and Customer Experience

Board of Governors Open Session February 8, 2013 Megan J. Brennan Chief Operating Officer

Quarter 1 Performance

Our Employees Delivered First-Class Mail

Improved Performance
Overnight 2 Day 3-5 Day

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FIRST-CLASS MAIL SERVICE PERFORMANCE

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Quarter 1 Performance First-Class Overnight

Target 96.70
100 95 90 85 80 75

96.20

95.73

QTR 1
Source: Product Information

SPLY
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Quarter 1 Performance First-Class 2-Day

Target 95.10
100 95 90 85 80 75

95.71 92.72

QTR 1
Source: Product Information

SPLY
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Quarter 1 Performance First-Class 3-5 Day

Target 95.00
100 95

93.93
90 85 80 75

92.83

QTR 1
Source: Product Information

SPLY
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Quarter 1 Performance International Single Piece First-Class

Target 94.00
100 95 90 85

87.72 84.17

80 75

Qtr 1
Source: Product Information

SPLY
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CUSTOMER EXPERIENCE MEASUREMENT (CEM)

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Customer Experience Measurement Overall Experience

100 80 60 40 20 0
88.40 88.59 84.20 84.13

Residential
QTR 1
Source: CEM

Small/ Medium Business

SPLY
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Customer Experience Measurement National - Residential

100
91.12 91.21 90.81 91.05 85.35 84.86

80 60 40 20 0 Receiving Sending
QTR 1
Source: CEM

62.01

62.49

PO Visit
SPLY

Contact

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Customer Experience Measurement National Small Business

100 80 60
52.43 51.81 88.14 88.13 87.22 87.30 80.75 79.78

40 20 0 Receiving Sending
QTR 1
Source: CEM

PO Visit
SPLY

Contact

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Improving Customer Experience

Areas of Focus
Employee Engagement Customer Experience Essentials Effective Use of Data and Diagnostic Tools

to Drive Continuous Improvement

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