New Thinking = New Savings

1. Shape-Based Rate ChangeLance WhitsonVertical Account ManagerColleges and UniversitiesNACUMSSally-Ann MossNational Document Systems Specialist /Addressing

2. New Thinking = New Savings Mailpiece design will become even more critical with the 2007 postage rate increases

3. The USPS has unveiled proposed new pricing incentives that would reshape the future of mail • Current structure does not distinguish letters from flats and parcels • 1oz Letter and 1oz Flat are the same pricing structure • It costs the Postal Service more to process flats than letters due to size • New pricing creates an adjustable rate system by giving mailers the opportunity to obtain lower rates by changing the shape of the piece • Forcing mailers to use letter rate • Easier for the USPS to sort and manage letters • Postal Service is less impacted by weight - size has a greater impact • They have redesigned 2nd oz (reduced cost) • Eliminated the surcharge for 1 oz flats

4. 5 KEY AREAS AFFECTED • FIRST CLASS MAIL • PARCEL/PRIORITY MAIL • ADDRESS CORRECTION • CONFIRM SERVICES • STANDARD MAIL

5. FIRST CLASS MAIL OVERVIEW

6. Letter & Flat Measurements Flats 12” x 15” no more than ¾” thick Letters no more than ¼” thick 6 1/8" Max. 3 1/2" Min Size 5" 11 1/2" Max

7. First Class Mail Today • Shape – based pricing schedules • Letters • Flats • Parcels 2-ounce letter 2–ounce flat 2–ounce Parcel 63¢ 63¢ 63¢

8. First Class Mail Next May • Shape – based pricing schedules • Letters • Flats • Parcels 2-ounce letter 2–ounce Parcel 2–ounce flat 63¢ 63¢ 62¢ $1.20 63¢ 82¢ $ 1.30 PRC 58¢ PRC 97¢ PRC • De-emphasize weight

9. First Class Mail Impact • Single Piece Letters CurrentProposedDiff 1oz - .39c .41c 2c 2oz - .63c .58c -5c 2nd oz .24c .17c -7c • Automation Letters CurrentProposedDiff 1oz - 29.3c 31.2c 1.9c 2oz - 53c 43.7c -9.3c • Reduction for Single Piece 2nd oz from 24c to 17c • Reduction for Automation 2nd oz from 23.7c to 12.5c • Letters that exceed aspect ratio or are nonmachinable will be rated as flats regardless of weight • Aspect ratio = L/H must fall within a 1.3 and 2.5 ratio • 6x9 1/2 envelope = 1.5 = OK • 4x10 envelope = 2.5 = OK • 6x6 envelope = 1 = Not OK Will be charged 41 + 17 = 58c

10. No Yes No No No Yes Yes Yes Yes Yes No Automated Solution Current Rates How much does your item weigh? (If over 2 ounces) Shape-Based Pricing Compliant System May 2007 Rates Classify your mail by weight, size, and thickness Does the item weigh less than 3½ ounces? No No Is the item smaller than 6 1/8” x 11 ½” Does the item weigh less than 13 ounces? Is the item smaller than 12” x 15”? Is the item less than ¼” thick? Is the item less than ¾” thick? First-Class Letter, Flat or Parcel Parcel Letter First-Class Letter, Flat or Parcel Flat

11. By converting flats to letter size a mailer can save $1.960

12. New Category of Mail • Not Flat Machinable Category • Mail that is too thick or rigid to run on the USPS Flat sorters • Mailpiece smaller than 5x6, thicker than a ¼” • Mailpieces longer than 15” • Mailpieces thicker than ¾”

13. ADDRESS CORRECTION/CONFIRM

14. ADDRESS CORRECTION SERVICES • Postmaster General has stated by 2010 UAA Mail will have to be reduced by 50% • 2 Billion Dollar cost to the USPS Annually • USPS encouraging mailers to use ACS and utilize 4 state barcode or 1 code • Future use for certified mail • Discount for using 1 code b/c and electronic processing • First 2 notices for 1CL free additional .05 auto letters • First 2 notices for STD .02 additional .15 • Electronic process w/o 4 state b/c reduced from .21 to .06 One code

15. UAA Mail

16. 4 State Barcode 2 State Planet code 2 State Postnet Barcode 4 State Barcode

17. ABC Company 123 Main Street Bay Village OH 44140 Address Service Requested #BWBJDCK******************38188 #901 681 4676# INTELLIGENT MAIL AND ADDRESS QUALITY 6060 PRIMACY PKWY STE 201 MEMPHIS TN 38188-0001 Ancillary Endorsement Planet Code ACS Post Net Barcode ABC Company 123 Main Street Bay Village OH 44140 INTELLIGENT MAIL AND ADDRESS QUALITY 4 State Barcode accomplishes all 6060 PRIMACY STE 201 MEMPHIS TN 38188-0001

18. ADDRESS CORRECTION Today, mailers assign a Zip+4 code to addresses that may be deliverable within a known address range New regs will require “DPV” Delivery Point Validation CASS Before 23033 Roberts Running Bay Village Ohio 44140 After 23033 Roberts Run Bay Village OH 44140-2976 DPV Before 23033 Roberts Running Bay Village Ohio 44140 After 23034 Roberts Run Bay Village OH 44140-2976

19. LACS Link will also be a requirement in August. This allows a customer to convert Rural Routes to real deliverable addresses. As an example out in the plains addresses that consist of RR1 which doesn’t exactly state where the building is. For the 911 conversion these addresses need updating so emergency vehicles can easily find the building

20. STANDARD MAIL

21. STANDARD MAIL • Shape based pricing like 1CL • Letter pricing based on barcoding and machinability • Flats pricing based same as Letters except for ‘NFM’ or Not Flat Machinable • Machinable and Non ParcelsAuto Flats = processed on ASFM100 w/bar code • Non Auto Flats = processed on ASFM100 w/o barcode • NFM = cannot be processed on ASFM100 • Will end up as a Parcel

22. What you can do • Don’t Panic • By taking the following steps you can greatly minimize the impact of Shape Based Pricing • 6 1/8th x 11 ½” No more than ¼” thick • If you have multiple pages into an envelope consider duplex printing • Ensure that you purchase a decision making weigh platform that can detect thickness, weight and dimensions • Change the font size of the print • Re examine forms for unnecessary print

23. Mailing System Solutions • Full line of mailing systems solutions: • HP Digital Inkjet Printing technology • SBP Compliant dynamic weighing platforms • Modular construction (ability to add at any time) • Touch screen control panels • Industry leading mixed mail processing speeds • 4 Point detection system

24. Folding and Inserting Solutions • Unfolded pages inserted into a flat will cost more. To save money, you should fold your inserts. • Minimize the number of unfolded items in your mail. Fold them and put them into a #10 or 6” x 9 ½” • Grouping documents into one envelope to cut postage costs. One 2oz flat at .97 is still more expensive than two mail pieces at .41 • Switch from single sided printing to double sided printing. • Maximize each oz. Add a marketing piece or two. If you have room to spare in an envelope, use it

25. Software Solutions • Forms creation software helps you gain control over the creation, customization and distribution of business critical documents. This will save time, labor and costs by providing: • Document grouping capability • OMR printing for OMR capable inserters to scan and collate priot to folding • Document e-mailing, faxing and archiving • Address correction and validation • Presort and automation

26. Addressing • Undeliverable addresses mean unpaid invoices, lost sales and poor customer service. It is more important than ever to ensure that: • The USPS can deliver your mail to the proper address • Your postage will not be wasted on a bad address • Address validation software will allow you to take advantage of automation rates which will reduce your costs

27. SUMMARY • Anticipate major change modifications in size, weight and shape for all classes of mail • Letters • Flats • Parcels • Very complex for the casual mailer • Need more details from USPS • Will take full 10 months at PRC • Implemenation lead time 60 days • Impact is mailer specific • Will be difficult for USPS to administer • Thousands of Window people need to be trained • Customers will need to be trained • Proposal will require the Post Office employee to know whether the piece is a letter, a flat or a package based on size • Will be difficult for customers to manage • Will be very costly to the USPS in equipment, personnel and training

28. Timeline 2007 2006 May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 10 Months 1 Year Filing Date (May 3, 2006) PRC Recommendation (Early March) Litigation (May through March 2007) Governors Decision (March/April) Implementation (May/June)

29. For more information log onto • www.usps.com/ratecase Additional questions Lance Whitson l.whitson@neopost.com 440.724.4487 Cell Sally-Ann Moss s.moss@neopost.com 734.732.5159 Cell

30. Questions?