Thursday, October 23, 2014 Area Mailing Industry Focus Group Postal/MTAC Update

Agenda Mailer Scorecard Programs Monthly Updates of Presort Data MTAC Activity HUBs Price Change Speculation

USPS ® Programs Driving Mailer Scorecard Full-Service –Adoption rate at 79% and climbing –Mailers with DMUs must be at 75% by Nov 2014 e-Induction – Adoption rate at 30% for all drop ship containers –Eliminates the need for 8125s and 8017s Seamless Acceptance –Adoptions rate at 15% of all mail volume –100+ live sites –Will eliminate the need for MERLIN

Expanded Mailer Scorecard

Volume Information: Provides the count of container, handling units and pieces that were provided in eDoc and included in the verification results on this tab.

Expanded Mailer Scorecard Full-Service Verifications: These verifications compare the eDoc against the Full-Service preparation requirements for Full-Service mailings.

USPS Plans for Full Service Invoicing USPS working on the reporting data Invoicing starting April 2015

Move Update Move-Update Validation: This validation will replace the MERLIN Move-Update verification for mailers providing more than 75% of their volume as Full-Service. Invoicing Proposed for April 2015

Sampled vs. Census Verification Seamless acceptance, enhances the opportunity to ensure Move Update compliance and reduce UAA –Census verification is 100% piece verification of the mailing –Sampled verification is processing a subset of a mailing (example: 1,000 pieces out of a 100,000 piece mailing) to determine if an approved Move Update method is applied Recent OIG report stated only 3% currently verified for Move Update Inherent inaccuracies in this method including match rates, data timing, and readability of the MERLIN device

What Do Percentages Mean? Current MERLIN threshold is at 30% and based on sampling USPS moving to census method with a currently proposed threshold of.8% –.8% will be reviewed after August as more data becomes available for analysis Preliminary study showed that these two percentages will yield equivalent assessment dollars when looking at Full-Service mailings with ACS

eInduction Entry Point Validations: This validation checks the correctness of the Postal Service entry facility in the doc for mailers providing more than 75% of their volume as Full-Service.

Monthly Presort Data Schedule Presort data files published monthly –First business day of the month –AIS products will be the 15 th of previous month 30-day notification period –Software providers have five business days to publish data electronically –Mailers will have ~three weeks of notification period 30-day transition window

Terms and Definitions Publication Date Notification Period Effective Date Transition Window Expiration Date Induction Date

Monthly Presort Data Schedule Overview AugustSeptemberOctoberNovemberDecember USPS Release 5 Notification (used for planning Sept or Oct mailings) Current data setOutgoing data set USPS Release 6 Notification (used for planning Oct or Nov mailings) Current data setOutgoing data set USPS Release 7 Notification (used for planning Nov or Dec mailings) Current data setOutgoing data set

Seamless Acceptance eDoc Nesting/Sortation Validations: This validation checks the presort in the eDoc against labeling lists and presort rules for mailers providing more than 75% of their volume as Full-Service.

Additional Information

MTAC Activity Work Groups –138 eInduction –143 Seamless Acceptance –159 HUBs –163 Third Party Reporting and Invoicing User Groups –#1: PostalOne! –#4: Confirm –#5: Addressing –#8: Promotions –#9 Presort Data

PostalOne! Deployment and eDoc Thresholds and Tolerances *Must contain street address/11-digit DPV code by Jan 2015

NEW: HUB Entry Pilot Testing Jan 5, 2015 – April 1, Pilot Facilities: –Tri-County Branch (Southeastern PA) –Rockford, IL –Possibly two others to be selected ~43 Facilities for Phase 1 Facilities being added to Mail Direction Files Only Cross Dock to Down Stream AO/DDUs

NEW: HUB Entry DSCF Discount Available DDU Pallet Restrictions Dock/Space Restrictions and Limited Hours of Operation 1600 CET Not applicable for FSS Zones

Timing of Next Price Change (Speculation) No Price Change January 2015 USPS wins exigent appeal –4.3% increase becomes permanent –CPI price increase ~April 2015 USPS loses exigent appeal –4.3% increase required to be rolled –2.8B of additional contribution will likely be hit Sept/Oct 2015 –USPS will roll off exigency and add CPI

Q&A Thank you — we appreciate your time! Bob Schimek Senior Director of Postal Affairs Satori Software Inc