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” with the mandate that we 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. Established as the successor to the Post Office Department (POD) by the Postal Reorganization Act, we are governed by an eleven-member Board of Governors. The Board is comprised 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. The Postal Accountability and Enhancement Act, Public Law 109-435 (P.L. 109-435) made further revisions to the Postal Reorganization Act. The Postal Service’s governing statute is codified in title 39, United States Code.

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

The law divides our services into two broad categories: market-dominant and competitive. Throughout this document and in the day-to-day operation of the organization, we refer to market-dominant services as “Mailing Services” and competitive services as “Shipping Services.” Mailing Services include, but are not limited to, First-Class Mail, Standard Mail, Periodicals and Package Services. Price increases for these services are subject to a price cap based on the Consumer Price Index — All Urban Consumers (CPI-U).

Shipping Services include Priority Mail, Express Mail, Bulk Parcel Post and Bulk International Mail. The regulations for Shipping Services place no upper limit on price changes while setting a price floor.

We sell Mailing and Shipping Services through over 36,000 Post Offices, stations, branches, contract postal units, our website www.usps.com and a network of consignees. We deliver mail to more than 150 million city, rural, Post Office box and highway delivery points. We conduct operations primarily in the domestic market, with international revenue representing less than 4% of total revenue.

P.L. 109-435, as amended by P.L. 111-68, requires that, over time, we fully fund our obligations for the established health and retirement benefits of current and future postal retirees. To accomplish this, the law established a new Postal Service Retiree Health Benefits Fund (PSRHBF) and required that we make annual payments of between $1.4 billion and $5.8 billion into the PSRHBF through 2016.

P.L. 109-435 also replaced the Postal Rate Commission with the Postal Regulatory Commission (PRC), endowing it with regulatory and rule-making powers as well as oversight obligations.

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 PRC certain financial reports containing information prescribed by the SEC under section 13 of the Securities Exchange Act of 1934. These include quarterly reports containing information required by the SEC to be filed on Form 10-Q within 40 days after the end of each fiscal quarter; an annual report containing information required by the SEC to be filed on Form 10-K within 60 days after the end of each fiscal year; and current reports containing information required by the SEC to be filed on Form 8-K within the prescribed time frame. Further, P.L. 109-435 requires the Postal Service to comply with the rules prescribed by the SEC for implementing Section 404 of the Sarbanes-Oxley Act of 2002, which pertain to reporting on the effectiveness of our financial internal controls. The requirement to comply with Section 404 is effective beginning with the 2010 fiscal year.

All references to years in this report, 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 2009.

Additional disclosures on our organization and finances, including Cost and Revenue Analysis reports; Revenue, Pieces, and Weight reports; Vision 2013 strategic plan and the Comprehensive Statement on Postal Operations may be found on our website at www.usps.com. Information on our website is not incorporated by reference into this report.