Financial Results Quarter 1 of Fiscal Year 2015

MTACFebruary 17, 2015

Financial Results

December YTD (3 Months) FY FY(Billions) 2015 2014

Revenue 1 $18.8 $18.0

Expenses 1, 2 17.7 17.3

Controllable Income (Loss) 1, 2 1.1 0.7

Retiree Health Benefits Pre-Funding (1.4) (1.4) Workers' Comp. Fair Value Adj. (0.8) 0.5 Workers' Comp. Other Non-Cash Adj. 0.3 (0.2)

Net Income (Loss) 1 ($0.8) ($0.4)

Liquidity Days (of oper. cash) 3 26 14Volume (Pieces) 42.6 42.0

1 - Retail and delivery days were even compared to SPLY.2 - Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities.3 - FY2015 liquidity days’ increase is primarily due to shift in timing of $1.8B in Payroll and $.4B EFT to Jan. 2, 2015.

2

Volume: FY2015 Q1 vs. SPLY

FY14 Actual FY15 Actual0.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

40,000.0

45,000.0

16,868.2 16,678.9

21,993.4 22,767.3

1,112.6 1,255.7 1,782.1 1,650.1

First-Class Mail Standard Mail Total Shipping & Package Other (includes Periodicals) International Mail

Pie

ce

s -

Bil

lio

ns

+1.4%

+3.5%

-1.1%

42.0 42.6

-7.4%+12.8%

3

Revenue: FY2015 Q1 vs. SPLY

FY14 Actual FY15 Actual $-

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0

$16,000.0

$18,000.0

$7,301.3 $7,567.3

$4,627.8 $4,978.7

$3,865.5 $4,291.1

$1,334.9$1,096.4$870.7$833.5

First-Class Mail Standard Mail Total Shipping & Package Other (includes Periodicals) International Mail

+4.3%

+7.6%

-18.3%

-1.2%

+3.7%

+10.4%

$18.8$18.0

$ B

illion

s

4

Shipping & Package Services Revenue: FY2015 Q1 vs. SPLY

FY14 Actual FY15 Actual $-

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0

$4,500.0

$2,170.7 $2,306.0

$0.8 $1.0

$528.8

$606.4 $230.0

$240.1 $196.0

$194.2

Priority Mail & Std. Post Parcel Select and Return F-C Package Service Package Svcs Priority Mail Express

+10.4%

+27.7%

+3.3%

-0.3%

+5.7%

+12.9%

$3.9

$4.3

$ B

illion

s

5

December YTD (3 Months) FY FY(Billions) 2015 2014

Compensation & Benefits $13.6 $13.2Transportation 1.8 1.8 Depreciation 0.4 0.5 Supplies & Services 0.7 0.6 Rent, Utilities & Other 1.2 1.2

Controllable Expenses $17.7 $17.3

Workhours (millions) 293 287

Controllable Expenses

1 - Delivery days were even compared to SPLY.2 - Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities.

1, 2

6

• Liabilities exceed assets by approx. $46 billion

• The USPS has only 35 cents of assets to cover each dollar of its liabilities

A Deep Financial Holeas of December 31, 2014

1 Under multi-employer accounting rules, there are approximately $45B in obligations not shown on the balance sheet.

Significant profits over years and legislation are needed to recover.

Unrestricted Cash $ 7.1B Retiree Health Benefits $23.8B

Buildings & Equipment, $16.2B Workers' Compensation $17.9Bnet of depreciation

Debt $15.0BOther Assets $ 1.7B

Accrued Compensation, $ 5.0Bbenefits, and leave

Deferred Revenue $ 3.3B

Other $ 6.1B

Total Assets $25.0B Total Liabilities 1 $71.1B

ASSETS LIABILITIES

7

8

0123456789

1011121314151617181920212223242526

Sep

-13

Oct

-13

No

v-13

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-14

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-14

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Ap

r-15

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

Lin e 6

Lin e 5

Lin e 4

Lin e 3

Lin e 2

FY2014- October FY2016 Liquidity

Days of Operating Cash Available

• Liquidity includes unrestricted cash plus available borrowing, up to $15B limit.

• FY2015 Days of Operating Cash – based on average operating costs disbursed per day ~$275M (FY2014~$265M).

Mid-October Balances shown - Low points after annual Workers’

Compensation payments to DOL

No payments for Retiree Health Benefits (RHB) Pre-Funding are included ($5.7B in 2014 and $5.7B in 2015)

19 days

Days

Actual

FY2014 FY2015

3 bi-weeklypay-days

3 bi-weeklypay-days $ 1 B

$ 2 B

$ 4 B

$ 3 B

$ 5 B

$ 6 BExigent price

increase began Jan. 26, 2014

$ 7 B

Preliminary Projection

23 days