FINANCIAL UPDATE

1
FINANCIAL UPDATE
MTAC
Mailers Technical Advisory Committee
Meeting November 8, 2007
H. Glen Walker Chief Financial Officer
Executive Vice President
2
FY 2007 Key Accomplishments

• Record Service Levels
• Reduced Workhours by 36 Million
• TFP at 1.7 is 0.7 above Plan Leading to Eighth
  Consecutive Year of Positive Productivity
• Negotiated Labor Agreements with 3 Unions

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FY 2008 Planning Assumptions

• Economy

• Gross Domestic Product 2.6

• Consumer Price Index 2.0

• Employment Cost Index -1 2.0

• Retail Sales 1.9

• No Rate Change Assumed Decision Pending

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4
FY 2008 IFP Summary

• Revenue (4.3 to FY 2007)
• Volume (0.1 to FY 2007)
• Cost Reductions of 1 Billion
• Expense Growth below CPI
• Payment of 5.6 Billion to Postal Service Retiree
  Health Benefit Fund (PSRHBF)
• Ninth Consecutive Year of TFP Growth

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FY 2008 IFP vs. Projected FY 2007
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Volume Change
212.2B
212.3B
Standard
Standard
First- Class
First- Class
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Total Factor Productivity 1972 -2007
Cumulative Growth
Percent Growth
8
FY 2008 Cost Reductions
Total 1.0B
9
Total Workhours
(Millions)
10
Projected FY 2008 Volumes
TOTAL MAIL VOLUME
11
Projected FY 2008 Volumes
TOTAL FIRST-CLASS MAIL VOLUME
12
Projected FY 2008 Volumes
TOTAL STANDARD MAIL VOLUME
13
Projected FY 2008 Volumes
TOTAL PRIORITY MAIL VOLUME
14
Projected FY 2008 Volumes
TOTAL EXPRESS MAIL VOLUME
15
Projected FY 2008 Volumes
TOTAL PERIODICAL MAIL VOLUME
16
FY 2008 Risks and Opportunities

• Economy
• Do Not Mail List
• Volume Impact from May 2007 Rate Increase
• Managing Workforce Flexibility
• Continuing Work Hour Reductions
• Benefits/Costs from Postal Act of 2006

17
FINANCIAL UPDATE
MTAC
Mailers Technical Advisory Committee
Meeting November 8, 2007
H. Glen Walker Chief Financial Officer
Executive Vice President