FINANCIAL STATEMENTS

Years Ended September 30, 2009

Years Ended September 30, 2008

Years Ended September 30, 2007

Operating revenue

$68,090

$74,932

$74,778

Operating expenses:

Compensation and benefits

53,154

53,585

54,186

Retiree health benefits

3,390

7,407

10,084

Transportation

6,026

6,961

6,502

Other

9,260

9,785

9,333

Total operating expenses

71,830

77,738

80,105

Loss from operations

(3,740)

(2,806)

(5,327)

Interest and investment income

26

36

195

Interest expense

(80)

(36)

(10)

Net Loss

$(3,794)

$(2,806)

$(5,142)

See accompanying notes to the financial statements.

September 30, 2009

September 30, 2008

Current Assets:

Cash and cash equivalents

$4,089

$1,432

Receivables:

Foreign countries

526

450

U.S. government

150

133

Other

177

187

Receivables before allowances

853

770

Less allowances

29

41

Total receivables, net

824

729

Supplies, advances and prepayments

138

193

Total Current Assets

5,051

2,354

Property and Equipment, at Cost:

Buildings

22,859

21,907

Equipment

20,970

21,544

Land

2,995

2,968

Leasehold improvements

1,298

1,279

Subtotal

48,122

47,698

Less allowances for depreciation and amortization

26,889

25,886

Subtotal

21,233

21,812

Construction in progress

1,447

1,381

Total Property and Equipment, Nett

22,680

23,193

Other Assets — Principally Revenue Forgone Receivable

387

439

Total Assets

$28,118

$25,986

See accompanying notes to the financial statements.

September 30, 2009

September 30, 2008

Current Liabilities:

Compensation and benefits

$3,673

$3,466

Payables and accrued expenses:

Trade payables and accrued expenses

1,203

1,246

Foreign countries

470

435

U.S. government

207

85

Total payables and accrued expenses

1,880

1,766

Customer deposit accounts

1,347

1,449

Deferred revenue-prepaid postage

2,445

1,689

Outstanding postal money orders

640

698

Prepaid box rent and other deferred revenue

461

461

Debt

3,675

7,200

Total Current Liabilities

14,121

16,729

Noncurrent Liabilities:

Workers' compensation costs

9,064

7,003

Employees' accumulated leave

2,225

2,208

Deferred appropriation and other revenue

457

525

Long-term portion capital lease obligations

544

587

Deferred gains on sales of property

305

312

Contingent liabilities and other

290

294

Long-term portion notes payable

6,525

—

Total Noncurrent Liabilities

19,410

10,929

Total Liabilities

33,531

27,658

Net (Deficiency) Capital

Capital contributions of the U.S. government

3,087

3,034

Deficit since 1971 reorganization

(8,500)

(4,706)

Total Net (Deficiency) Capital

(5,413)

(1,672)

Total Liabilities and Net (Deficiency) Capital

$28,118

$25,986

See accompanying notes to the financial statements.

Capital Contributions of U.S. Government

Retained (Deficit) Earnings Since Reorganization

Total Net (Deficiency) Capital

Balance, September 30, 2006

$3,034

$3,242

$6,276

Net loss

—

(5,142)

(5,142)

Balance, September 30, 2007

3,034

(1,900)

1,134

Net loss

—

(2,806)

(2,806)

Balance, September 30, 2008

3,034

(4,706)

(1,672)

Additional Capital Contributions

53

—

53

Net loss

—

(3,794)

(3,794)

Balance, September 30, 2009

$3,087

$(8,500)

$(5,413)

See accompanying notes to the financial statements.

Years Ended September 30, 2009

Years Ended September 30, 2008

Years Ended September 30, 2007

Cash flows from operating activities:

Net Loss

$(3,794)

$(2,806)

$(5,142)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

2,270

2,319

2,152

Loss (gain) on disposals of property and equipment and impairments, net

109

(16)

23

Decrease (increase) in appropriations receivable revenue forgone

52

(47)

2

Increase (decrease) in noncurrent workers’ compensation liability

2,061

203

(69)

Increase in employees’ accumulated leave

17

79

13

Decrease in noncurrent deferred appropriations and other revenue

(4)

(5)

(7)

(Decrease) increase in other noncurrent liabilities

(4)

(167)

281

Changes in current assets and liabilities:

Receivables, net

(95)

30

80

Supplies, advances and prepayments

55

8

4

Compensation and benefits

207

(105)

347

Payables and accrued expenses

113

(302)

(93)

Customer deposit accounts

(102)

(50)

(148)

Deferred revenue-prepaid postage

756

547

(45)

Outstanding postal money orders

(58)

(149)

(38)

Prepaid box rent and other deferred revenue

(10)

22

37

Net cash provided by (used in) operating activities

1,573

(439)

(2,603)

Cash flows from investing activities:

Decrease in restricted cash

—

—

2,958

Purchase of property and equipment

(1,839)

(1,995)

(2,715)

Proceeds from deferred building sale

6

4

218

Proceeds from sales of property and equipment

27

53

39

Net cash (used in) provided by investing activities

(1,806)

(1,938)

500

Cash flows from financing activities:

Issuance of notes payable

7,000

4,500

1,000

Payments on notes payable

(4,500)

(1,000)

—

Net change in revolving credit line

500

(500)

1,100

Payments on capital lease obligations, net

(46)

(29)

(19)

U.S. government appropriations — expensed

(64)

(61)

(76)

Net cash provided by financing activities

2,890

2,910

2,005

Net increase (decrease) in cash and cash equivalents

2,657

533

(98)

Cash and cash equivalents at beginning of year

1,432

899

997

Cash and cash equivalents at end of year

$4,089

$1,432

$899

Supplemental cash flow disclosures: Interest paid

$43

$37

$9

See accompanying notes to the financial statements.