1. Transition of Stamp Formats from WAG to PSA February 17, 2015

2. Current Since 2002 nearly all USPS stamps issued have been Pressure Sensitive Adhesive (PSA) Specifically the panes, booklets, and small coils Large coils in lower denominations (under First Class rates), non-profit & pre-sort have been offered in both Water Activated Gummed (WAG) or PSA Majority of coils with denominations of 5¢ or less are available in only WAG coils of 10,000 OR PSA panes of 20 PSA coils are the majority of pre-sort available with WAG available only in 500 or 10,000 pieces 1

3. Current Offerings in Low Denomination Formats Pressure Sensitive AdhesiveWater Activated Gummed DenominationDescription Pane of 20 Coils of 3,000 Coils of 10,000 Coils of 500 Coils of 3,000 Coils of 10,000 1¢Tiffany Lamp  1¢Bobcat  2¢Navajo Jewelry  3¢Silver Coffeepot  4¢Chippendale Chair  5¢American Toleware  5¢Art Deco (Non Profit)  5¢Sea Coast (Non Profit)  10¢American Clock  10¢Snowflakes (Presorted STD)  10¢Patriotic Banner (Presorted STD)  49¢Ferns  49¢Ferns (Forever)  25¢American Eagle (Presorted First Class)  25¢Spectrum Eagle (Presorted First Class)  2

4. Voice of the Customer Equipment for PSA & WAG affixing are separate &unique Mailing industry faces operational challenges when requested to utilize multiple stamps Some mailers may still have only WAG equipment 3 5¢ Total 3 – 1¢, Bobcat PSA: 3k & 10k coils WAG: 10k coils 1 – 2¢, Navajo Jewelry PSA: Pane of 20 WAG: 10k coil 5¢ Total 1 – 1¢, Bobcat PSA: 3k & 10k coils WAG: 10k coils 1 – 4¢, Chippendale Chair PSA: Pane of 20 WAG: 10k coils

5. Challenges The water activated paper is only available through international channels Our stamp manufacturers import this paper for print runs This and other production factors increases the cost of production by 115% over that of PSA The base cost is more than double that of PSA Due to the paper import, the production cycle can take nearly 3 months longer than PSA 4

6. Solution USPS recommends completing the implementation of PSA stamps for all stamp releases Cease production of WAG stamps (either in new issues or reprints) All new stamps and reprints would be produced in the PSA format Existing WAG inventory would remain on sale until inventory depletion 5

7. Future Conversations Larger coil sizes New images Alternate stamp orientations Multiple denominations per coil 6