National Postal Policy Council (NPPC) Linda Malone Vice President, Network Operations May 10, 2016

Agenda USPS Financials Service Performance Update Remittance Update Secure Destruction PARs Information Questions

USPS Financials

Financial Results Revenue - Revenue was $1.4B above SPLY. Controllable Expenses - Expenses were $1.0B above SPLY. Salaries & Benefits SPLY overrun of $551M: 17.2M hours overrun in total work hours resulted in a $719M overrun. Offset by a $145M underrun in average mix and rate in the field, and $23M underrun in leave liability adjustment. YTD March has one more delivery day compared to SPLY. Transportation SPLY overrun is mostly from 3R Air Transportation of $172M FedEx Day 1 - Estimated. 2 - Before RHB pre-funding, FERS unfunded liability amortization, and non-cash adjustments to workers’ compensation liabilities. 3 - March YTD FY2016 has one more retail and delivery day as compared to FY2015.

Service Performance Update

First-Class Composite YTD 91.59 Q3TD 93.13 Actual SPLY Var +3.51 +6.25 YTD/Q3TD: SPFC thru Apr 22, 2016, Presort Apr 15, 2016

First-Class Overnight YTD 95.71 Q3TD 96.18 Actual SPLY Var +0.23 +1.44 YTD/Q3TD: SPFC thru Apr 22, 2016, Presort Apr 15, 2016

First-Class 2-Day 93.95 95.13 +1.76 +2.53 YTD Q3TD Actual SPLY Var YTD/Q3TD: SPFC thru Apr 22, 2016, Presort Apr 15, 2016

First-Class 3-5 Day 88.43 91.19 +6.11 +9.95 YTD Q3TD Actual SPLY Var YTD/Q3TD: SPFC thru Apr 22, 2016, Presort Apr 15, 2016

First-Class Presort 3-5 Day - Air YTD 89.22 Q3TD 94.00 Actual Target Var (6.03) (1.25) 95.25 First-Class Presort 3-5 Day Air UCL/LCL Target QTD: Presort thru Apr 29, 2016 Presort does not include LMF

First-Class Presort 3-5 Day - Surface YTD 93.64 Q3TD 96.21 Actual Target Var (1.61) +0.96 95.25 First-Class Presort 3-5 Day Surface UCL/LCL Target QTD: Presort thru Apr 29, 2016 Presort does not include LMF

Scanning 97.17 97.47 +0.50 +0.77 YTD Q3TD Actual SPLY Var YTD/Q3TD thru Apr 29, 2016

Phoenix Hecht Remittance Survey Results – Fall 2015-02

PH Fall 2015-02

Nationally improved by 1.8 hours PH Fall 2015-02 Nationally improved by 1.8 hours Improved in 22 out of the 28 cities measured 11 Cities achieved below 50 hours 10 cities improved by 4 or more hours versus the previous survey Caller handoff metric improved by 1.5 hours

Just completed the Spring survey this week PH Spring 2016-01 Just completed the Spring survey this week Focused on: Customer-USPS partnership related to mail availability and communication Internal operational optimization Expect official results by the end of June

Secure Destruction

SD Program Overview Each year USPS® returns over 1.2 billion pieces of Undeliverable-As- Addressed (UAA) First-Class Mail® to mailers Large mailers send mail that is processed at USPS® facilities prior to being sent out for delivery. Secure Destruction eliminates UAA Return to Sender mail at the USPS® facility. Secure Destruction Service Secure Destruction was created in response to mailers asking to reduce handling costs for “Return to Sender” mail with Personal Protected Information (PPI) Applies only to letter-sized First-Class Mail® Performed by USPS® employees in USPS® facilities An opt-in service for mailers provided at no additional fee

Federal Government Records SD Program Overview Secure Destruction may be of interest to mailers who face the risk of liabilities if they don’t properly and securely destroy Personal Protected Information (PPI) Protected by… Protected by… Target Types of PPI Health Records Student Records Credit Card Records Consumer Records Financial Records Health Insurance Portability and Accountability Act of 1996 Financial Services Modernization Act of 1999 Protected by… State Security Breach Notification Laws Protected by... Federal Government Records Family Educational Rights and Privacy Act of 1974 Protected by… Governed by… Privacy Act of 1974 Payment Card Industry Data Security Standard

SD Program Overview Existing and new equipment will be used to complete the process 1 2 3 USPS® CIOSS Undeliverable Mail Processing (PARS) Letter-size First-Class Mail® enters the USPS® Combined Input-Output Sub System (CIOSS) processing facility. Label and Sort Mailpieces UAA RTS mail is labeled and sorted for Secure Destruction. Verify Mailpieces All SD mail is verified by USPS® employees prior to destruction. Shred Mailpieces All verified SD mail is fed into an industrial cross-cut shredder at the USPS® facility. Recycle Shredded Paper USPS® facilities recycle shredded SD mail. 5 4 Secure Destruction is a part of the USPS® BlueEarth sustainability initiatives. The service securely shreds and recycles letter-size pieces of Undeliverable-As-Addressed (UAA) First-Class Mail® with personal protected information that would otherwise be returned to the sender. Secure Destruction is an opt-in service that operates under the protection and supervision of the United States Postal Service.

Receiving electronic notifications is a Two Part Process* Notification of new address or reason for non-delivery is provided to mailer via ACS™ Secure Destruction Data is associated with the IMb™ and is provided in a separate report * All mailer SD eNotification records are provided daily in reports available to registered mailers through the customer Electronic Product Fulfillment (EPF) customer portal website. Reports provide mail piece IMb™, the date, time and 5 digit of the Postal Facility where the mail piece was routed for the Secure Destruction.

SD Program Overview Securely destroying mail within USPS® processing facilities provides three types of benefits: Environmental - Reduces the carbon footprint of UAA mail through recycling and eliminating unnecessary reverse logistics associated with returning mailpieces to the sender Economic - Reduces the costs for mailers for handling and destroying RTS mail in-house or through third party contactors Security - Strengthens mailers’ information security programs, processes, and procedures

FY14, FY15 and FY16 (YTD – thru 3/31/16) Mail Processing Stats Total SD Mail Volumes FY14, FY15 and FY16 (YTD – thru 3/31/16)

SD Mailer Update

Outreach Overview Ongoing Mailer Communications and Outreach RIBBS SD Webpage RIBBS PCC Webpage Mailer Industry Alerts SD Earth Day Industry Alert Article (issued April 20th) Industry Alert on SD Workshop-in-a- Box Update on RIBBS PCC Page (May release) Individualized SD Presentations to interested mailers Public Presentations at Conferences and Meetings (e.g. GSA’s Last Known Address Interagency Workgroup, Nat’l Postal Forum, etc.)

SD Enrollment For Additional Information on Secure Destruction visit the RIBBS SD Webpage at: https://ribbs/index.cfm?page=securedestruction SD Enrollment and eNotification Questions?... Contact the National Customer Support Center at: Phone: 877-640-0724, option 1 Email: acs@usps.gov Other SD Questions? …Contact the USPS Office of Sustainability SD Program Management Team Phone: 203-574-6590 Email: ronald.f.robbins@usps.gov

PARS Information

First Class Mail Statistics Report PARs Information First Class Mail Statistics Report   Total Processed Local Non-Local Returned Waste Mail Other ACS Jan-16 72,610,540 4,956,000 18,598,100 28,146,514 2,182,599 18,727,327 42,254,444 Feb-16 74,177,394 4,245,171 15,963,764 31,997,475 2,418,257 19,552,727 43,860,891 Mar-16 70,254,696 4,061,889 14,544,669 30,495,588 2,665,401 18,487,149 41,427,070 Apr-16 62,459,722 3,775,930 12,806,962 27,388,639 1,984,141 16,504,050 37,000,257 Total 279,502,352 17,038,990 61,913,495 118,028,216 9,250,398 73,271,253 Percentage 100.0% 6.1% 22.2% 42.2% 3.3% 26.2% Definitions Processed Pieces accepted for processing Addressed to SCFs defined as local in the zone table The inverse of Local, i.e. all the rest of the SCFs Returned to the sender Waste Disposed of by mailer request or due to the mail class of the piece All volume returned to the Carrier (No-Record, Temp Expired, Current Resident, Temp Not Effective) An Address Correction notification was processed based on the endorsement or Service Type Identified in the IMb

Questions & Open Discussion