Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Not applicable to this report.

Item 6. Selected Financial Information

See Financial History Summary on pages 58-59.

Cautionary Statements

Our discussion in the Management Discussion and Analysis represents our best estimate of the trends we know about, the trends we anticipate, and the trends we think are relevant to future operations. However, actual results may be different from our estimates. Certain forward-looking statements are included in this report. They use such words as "may," "will," "expect," "believe," "plan," and other similar terminology. These statements reflect our current expectations regarding future events and operating performance and speak only as of the date of this report. These forward-looking statements involve a number of risks and uncertainties.

The following are some of the factors that could cause actual results to differ materially from those expressed in, or underlying, our forward-looking statements: effectiveness of operating initiatives; success in advertising and promotional efforts; changes in national and local business and economic conditions, including their impact on consumer and business confidence; fluctuations in currency exchange and interest rates; labor and other operating costs; oil, fuel and other transportation costs; the effects of war and terrorist activities; competition, including pricing and marketing initiatives and new product offerings by our competitors; consumer preferences or perceptions concerning our product offerings; spending patterns and demographic trends; availability of qualified personnel; severe weather conditions; effects of legal claims; cost and deployment of capital; changes in laws and regulations; and changes in applicable accounting policies and practices. The foregoing list of important factors is not all-inclusive.

We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Volume and Revenue

Revenue for 2005 was $69,993 million, an increase of $964 million over last year. This increase was primarily due to Standard Mail which accounted for $831 million dollars of the increase. Total volume in 2005 of 211,743 billion pieces was 5.6 billion pieces above last year, primarily due to an increase of 5.4 billion additional pieces of Standard Mail. More than half of the growth in 2005 volume and revenue came in Quarter 1. A number of factors aligned to generate strong revenue and volume growth in Quarter 1, including solid U.S. economic growth, strengthening direct marketing channels, the quadrennial impact of election mailings and increased marketing activity in financial services and credit cards. A calendar shift that added two days to the holiday marketing and mailing season between Thanksgiving and Christmas also contributed to the strong first quarter results.

(Pieces in millions)

% Change

Note: Percentages are calculated based on unrounded numbers.
* Postal Service volume, mailgrams, and free matter for the blind are included in the "Other" category.

In 2005 Standard Mail volume exceeded First-Class Mail volume for the first time. Continued strong growth in retail sales, and a favorable investment environment led to increases in advertising spending, which spurred the growth in Standard Mail volume and revenue. Standard Mail volume growth was aided considerably by November 2004 election mail as well as being driven by the increasing strength of direct marketing channels and surges in credit card marketing. Standard Mail has also benefited from the "Do Not Call" telephone restrictions. Standard Mail continues to hold its ground in the advertising market by virtue of its two dominant characteristics: it can be targeted to specific audiences, and its effectiveness can be measured.