Financial Section Part I

Vehicles

We have one of the largest vehicle fleets in the United States, which includes an extensive fleet of alternative fuel vehicles.

Vehicle Inventory	2006	2005
(Actual numbers)
Delivery and Collection Vehicles (1/2 - 2 ton)	190,932	188,673
Mail Transport Vehicles (Tractors and Trailers)	7,484	6,909
Administrative Vehicles and Other Vehicles	6,296	6,533
Service Vehicles (Maintenance)	5,623	5,688
Inspection Service and Law Enforcement Vehicles	3,212	3,293
Mail Transport Vehicles (3 – 9 ton)	2,457	3,050
Total Vehicles	216,004	214,146

Item 3 – Legal Proceedings

We are subject to various claims and liabilities that arise in the normal course of postal operations. These claims generally relate to labor, tort, and contract disputes and are regularly reviewed by management, and where significant, by the Audit and Finance Committee of the Board of Governors, or the full Board of Governors. In our evaluation, no single claim is material to our financial statements taken as a whole. We have accrued in our financial statements of September 30, 2006, the estimated impact of those claims we think it is probable we will pay. See Note 8, Contingent Liabilities in Notes to the Financial Statements for additional information.

Item 4 – Submission of Matters to a Vote of Security Holders

Not applicable to the United States Postal Service. As an “independent establishment of the executive branch of the United States government,” we do not issue stock or related securities.