INTERPRETINING DEDUCTIONS ON INVOICES Discussion Document

Table of Contents: How are Deductions Communicated………………………………………………………………………… P1 The Delivery Performance System (DPS)………………………………………………………………… P4 -7 Drop-Ship Performance Programs Weekly Report…………………………………………………… P8-9 Email communications (UPC not on file)……………………………………………………………….. P10 APL Logistics (Import POs)……………………………………………………………………………………… P11 Merchandise Vendor Payable Portal……………………………………………………………………… P12-13 Summary………………………………………………………………………………………………………………… P14

How are Deductions Communicated? When reviewing an invoice , Deductions can be communicated from various TRU systems and departments. Depending on the deduction ID pre-fix and the freight terms of the PO. communication can occur in one of four different ways: The DELIVERY PERFORMANCE SYSTEM (DPS)- (Domestic PO’s ONLY) DROP-SHIP Performance WEEKLY REPORTS EMAIL- UPC Not on File Violations APL LOGISTICS- (IMPORT PO’s Only)- Additional Ocean Freight & Extension Chargebacks

“DPS” Delivery Performance System (Domestic POs ONLY) Invoice Items beginning with the Pre-fixes below correspond to DPS, and are REVIEWED BY the Vendor Compliance team: “ASN”- Represent non-compliance to TRU’s ASN expectations. A valid ASN is expected prior to receipt “ETA”- Represents fill rate and delivery non compliance “ITC”- An item is not verified prior to receipt at the DC “ITV”- :  Represents where a verified item was found to have discrepancies exceeding our tolerances and product has already been actively shipped. “CVR” - Carton variance routing. The carton quantity sent on the ASN differs from what was confirmed in FOM “APT”- Represents LATE or NO SHOW appointment   “GS1”- The information stated on the ASN is not an accurate depiction of the expected unique GS1 carton ID’s A Reversal of these deductions is indicated with an “R” replacing the first initial. (i.e RSN,RTA, RTC….)

DPS: WHEN/WHERE DO I APPEAL deductions? APPEALS MUST BE MADE PRIOR to APPEARING on the INVOICE DPS: WHEN/WHERE DO I APPEAL deductions? Deductions originating from DPS must be APPEALED through the DPS Application and done so within 14 calendar days of infraction Generation. Supply Chain Performance Program Appeal Process: 1.)    Infraction generates Sunday evening 2.)    Vendor must appeal in DPS within 14 calendar days of infraction generation 3.)     If appeal is filed Vendor Performance team will review and action based on supporting docs. 3b.) If appeal is not filed infraction moves into a billed status 4.)   If appeal is never filed, or rejected, the deduction is sent to MVPP 5.) Deductions appears on future invoice Communicated via: Delivery Performance System Contact: vendorcompliance@toysrus.com TRU OWNER: Vendor Performance

Dps: Am I Notified? NO Notification EMAILS are sent for infractions Generating In DPS. The VENDOR is RESPONSIBEL for reviewing weekly as a precaution to ensure appeals are filed in the necessary 14 Calendar DAY time frame.

DPS: Supporting Materials For further details pertaining to DPS, please click the link below. https://vendorconnect.toysrus.com/vendorextranet/dsp_vendor_training_dps.cfm See “DPS Navigation” after accessing link above.

DROP-SHIP Performance Programs: Invoice items beginning with the Pre-FIXS below originate from our Drop-Ship Compliance Programs “DK”- late shipment confirmation “DJ” - cancellation due to “out of stock” “DI” –failure to update daily inventory position “DL” – Late Shipment

Drop-Ship: WHEN/WHERE Do I APPEAL deductions? APPEALS MUST BE MADE PRIOR to APPEARING on the INVOICE Drop-Ship: WHEN/WHERE Do I APPEAL deductions? Deductions originating from DROP-SHIP must be APPEALED by emailing the DROP-Ship Compliance Team and done so within 14 calendar days of Appearing on the Commerce hub Report 1.)    Infractions generate Sunday evening and are communicated via report from commerce hub. 2.)    Vendor must appeal by responding to Ds.compliance@toysrus.com within 14 calendar days of infraction being reported. 3.)     If appeal is filed Performance team will review and action based on supporting docs. 3b.) If appeal is not filed infraction moves into a billed status 4.)    If appeal is never filed, or rejected the deduction then is taken from a future invoice. Communicated via: Weekly Commerce Hub E-Mail Report CONTACT: Ds.compliance@toysrus.com TRU OWNER: Drop-Ship Performance Team

Deductions Communicated via Email: UPC Not on file Invoice Deductions beginning with “U” Represents a UPC NOT ON FILE violation. The digits following the “u” indicates the TRU item number the violation corresponds to. UPC NOF violations are communicated DIRECTLY to the vendor via E-mail from vendor compliance. Communications are SENT ONLY Those set to receive the UPC Subscription User should review their extranet profile to verify if they has asked to receive this UPC subscription Appeals are expected to be filed within 14 calendar day of receiving the e-mail from TRU communicating the violation. Appeals are submitted by emailing the vendor compliance team back along with supporting documentation If no appeal is submitted or the Appeal is Rejected, and deduction is then taken on a future invoice. A Reversal of these deductions is indicated with an “R” replacing the first initial. (i.e RU)

APL Logistics (Import Po’s ONLY) Invoice items with the pre-fix of “AO” and “EX” are communicated by our logistics team and correspond exclusively to IMPORT. Below are the deductions communicated through APL Logistics. “AO”(Import infraction) -Represents a variance of the carton cube found on the FCR vs. the TRU item master. “EX” (Import infraction) - Represents when goods do not arrive at DHL in the ship window. Appeals are expected to be filed as soon as deductions are received. Appeals are submitted by emailing vendorcompliance@tosyrus.com along with supporting documentation.

“MVPP” Merchandise Vendor Payable Portal ANY deduction Pre-fix ID not Communicated in one of the four previously described methods originates in MVPP

MVPP: WHEN/WHERE DO I APPEAL DEDUCTIONS? APPEALS CAN BE MADE AFTER APPEARING on the INVOICE MVPP: WHEN/WHERE DO I APPEAL DEDUCTIONS? Disputes are to be filed through the MVPP APPLICATION and can filed up to 24 months after appearing on an invoice. UNLIKE the other communication methods, appealS can be filed after the deduction appears on the invoice. Communicated via: MVPP System CONTACT: Merch.Payables@toysrus.com TRU OWNER: Accounts Payable Team

Method of Communication: Where Appeals Are submitted SUMMARY Method of Communication: Toys R Us OWNER Deduction Pre-fixes Where Appeals Are submitted Appeal Window Contact Delivery Performance System (DPS) Vendor Performance *“ASN,” “ETA,” “ITC,” “ITV,” “CVR,” “GS1,” “APT” Through DPS Application. 14 calendar Days from infraction generation in DPS vendorcompliance@toysrus.com Commerce Hub E-Mail Weekly Report Drop-Ship Performance “DK,” “DJ,” “DL” “DI” Emailed to : Ds.compliance @toysrus.com 14 calendar Days from infraction first appearing on report. Ds.compliance@toysrus.com Merchandise Vendor Payable Portal (MVPP) TRU Accounts Payabale ALL Others Through MVPP application 2 years from appearing on invoice Merch.Payables@toysrus.com Vendor Performance Email * “U” Emailed to: vendorcompliance@toysrus.com 14 calendar Days from violation being communicated via email APL APL Logistics “AO” & “EX” * A Reversal of these deductions is indicated with an “R” replacing the first initial. (i.e RSN,RTA,RU RTM….)