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The United States Postal Service (we) commenced operations on July 1, 1971, as an “independent establishment of the executive branch of the Government of the United States.” We are governed by an 11-member Board of Governors. The Board is composed of nine Governors appointed by the President of the United States with the advice and consent of the Senate, plus the Postmaster General and the Deputy Postmaster General. Under the Postal Reorganization Act, and its successor, the Postal Accountability and Enhancement Act, Public Law 109-435 (P.L.109-435), we have a legal mandate to offer a “fundamental service” to the American people, “at fair and reasonable rates.” We fulfill this legal mandate to provide universal service at a fair price by offering a variety of classes of mail services without undue discrimination among our many customers. This means that within each class of mail, our price does not unreasonably vary by customer for the levels of service provided.

We serve individual and commercial customers throughout the nation, competing for business in the communications, distribution, delivery, advertising, and retail markets.

Our Mailing and Shipping Services are sold through almost 37,000 Post Offices, stations, branches, contract postal units, our website www.usps.com, and a large network of consignees. We deliver mail to more than 149 million city, rural, Post Office box, and highway delivery points. We conduct our operations primarily in the domestic market, with international operations representing approximately 3% of total revenue.

All references to years, unless otherwise stated, refer to fiscal years beginning October 1 and ending September 30. All references to quarters, unless otherwise stated, refer to fiscal quarters within 2008.

We are not a reporting company under the Securities Exchange Act of 1934, as amended, and are not subject to regulation by the Securities and Exchange Commission (SEC). However, effective for reporting periods ending after September 30, 2007, we are required under P.L.109-435 to file with the Postal Regulatory Commission (PRC) certain financial reports containing information prescribed by the SEC under section 13 of the Securities Exchange Act of 1934. These reports are further described on the following page.

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