JULY FINANCIAL RESULTS RELEASED
Net deficiency of $1.2 billion posted after escrow allocation
USPS revenues for July were $5.5 billion, or 0.5% under plan and 4.1% more than July 2005. Expenses for the month were $5.8 billion, or 0.4% over plan and 4.3% more than same period last year (SPLY). The net loss was $268 million before the escrow allocation. The net deficiency after the escrow allocation was $518 million.

Year-to-date (YTD), revenue through July was 0.6%, or $364 million higher than plan and 3.9% above SPLY. Expenses through July were 0.5%, or $295 million higher than plan and $2.4 billion above SPLY. YTD, mail volume is 0.8% above SPLY.

YTD, the net income before the escrow allocation is $1.3 billion. A net deficiency of $1.2 billion exists after the escrow allocation.

Contributing to the YTD performance was the new postage rate structure implemented on Jan. 8, 2006, which provided a 5.4% revenue increase needed to fulfill the requirement of Public Law 108-18, The Postal Civil Service Retirement System (CSRS) Funding Act, enacted in 2003. This law requires the Postal Service to hold $3 billion in an escrow account by Sept. 30, 2006, to cover the difference between the CSRS retirement costs before and after the implementation of this law. We are allocating $250 million per month for purposes of assessing our financial position.

Full results are posted on USPS.com at http://www.usps.com/financials/fos/welcome.htm.