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Letter from the Postmaster General and CEO and the Chairman of the Board of Governors

John E. Potter

To the President, Members of Congress, customers, employees, and the American people:

As the Postal Service entered fiscal year 2008, it became clear that the nation’s economy was entering a period of increasing stress. The financial and housing sectors in particular — two key mail generators — were weakening. This was reflected in diminishing mail volumes, which accelerated as the nation experienced declines in retail sales, consumer confidence, and credit availability.

Because the mail remains an early indicator of larger economic trends, this signaled an increasingly difficult year for our business. The Board and management acted quickly to adjust our plans — cutting costs, reordering priorities, realigning resources to a reduced workload, and refocusing our growth initiatives to better address dramatically changing conditions.

Alan C. Kessler

One thing that did not change — and will not change — is our commitment to service excellence, and earning our customers’ trust. This is the heart of our brand. Through a challenging year, the men and women of the Postal Service provided our customers with the most outstanding service ever, including a remarkable 97 percent on-time delivery rate for local First-Class Mail. And through a period marked by growing concern about the stability of many historic enterprises, the respected Ponemon Institute found that the Postal Service remained the most trusted government agency and among the 10 most trusted organizations — public or private — in the nation.

We began 2008 with a goal of reducing costs by $1 billion. We soon doubled that target, which we not only met, but exceeded by year end. Work hours were reduced significantly as overtime rates declined, and focused attrition activities helped bring career staffing down by more than 20,000 positions. New labor agreements contributed to our ability to better manage growth in benefit costs. Throughout the organization, we took steps to eliminate activities that were simply not cost effective in today’s changed business environment.

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