Richard J. Strasser, Jr. Chief Financial Officer & Executive Vice President

Mailers' Technical Advisory Committee Financial Update May 7, 2003 Richard J. Strasser, Jr. Chief Financial Officer & Executive Vice President

Quarter III, FY 2003 (Feb 22 – May 16, 2003) APs 7 & 8 Summary Outlook • Revenue below Plan (Feb 22 – Apr 18) ($296M) • Expenses below Plan ($177M) • Net Income under Plan ($119M)

Actual Plan Var %SPLY Revenue $43,666 $44,547 5.7 [-881] Expense 41,757 43,005 -1,248 1.2 Net Income $ 1,909 $ 1,542 366 Income Statement – YTD AP 8 (Sept 7, 2002 – April 18, 2003) Numbers may not add due to rounding [ ] = Unfavorable Variance to Plan ($ Millions)

FY 2003 – Total Mail Volume Change Plan Actual 0.5 % SPLY APs 7&8 PQ 1 PQ 2 PQ 3 PQ 4

FY 2003 – First-Class Mail Volume Change Plan Actual % SPLY -2.1 APs 7&8 PQ 1 PQ 2 PQ 3 PQ 4

FY 2003 – Standard Mail Volume Change Plan Actual 3.8 % SPLY APs 7&8 PQ 1 PQ 2 PQ 3 PQ 4

AP 1 2 3 4 5 6 7 8 Actual Expense Growth FY 2003 – Expense Trend

Actual Work Hour Reduction FY 2003 – Cumulative Work Hour Reductions (Millions)

Cumulative Career Complement Reductions AP 8 -59,858

* *Projection Total Factor Productivity Cumulative 1971 - 2003 Percent Growth

* *Projection Output Per Work Hour Cumulative 1971 - 2003 Percent Growth

Actual FY 2003 – Cumulative Net Income $1.91B $0.6B ($ Billions)

$5,551M $5,571M $5,510M $5,069M $5,281M $5,451M $5,398M $5,294M Net Inc/(Loss) $ 270M $ 120M $ 112M ($ 225M) Expense FY 2003 – Average AP Revenue & Expense

FY 2003 – Net Income (Loss) FY 2003 – Cumulative Net Income Plan $0.6B Average AP Net Income (Loss) ($ Billions) Quarter 1 $270M Quarter 2 $120M Quarter 3 $112M Quarter 4 ($225M)

Mailers' Technical Advisory Committee Financial Update May 7, 2003 Richard J. Strasser, Jr. Chief Financial Officer & Executive Vice President

Richard J. Strasser, Jr. Chief Financial Officer & Executive Vice President