1. ® Flats Sequencing System (FSS) February 2009 Cathy MoonPhil Fabrizio FSS Project Office MTAC Meeting

2. Agenda  Flat Volume Update ● Recap 2008 ● QTR 1, 2009 Trend  Phase 1 Capacity / Deployment Review  FSS Pre-production / Production  Flats Track – National Postal Forum 2009

3. Flat Volume 2006 – 2008 Comparison 200620072008 53.8 Billion52.4 Billion46.6 Billion Flat Volume Decline -1.4 billion Flat Volume Decline -5.8 billion -2.6%-11.1% Annual Flat Volume Decline Since 2006 = 7.2 billion Zones Required to Support 100 FSS 1,3001,8002,002 Original FSS Capacity Model

4. FY 2008 SPLY Comparison RPW Lowest Volume Since 1997

5. FY 2009 SPLY Comparison RPW -18.9 +.4 -5.3

6. FY 2009 SPLY Comparison RPW FY 2009 YTD Total Flat Volume Decline - 8.0% FY 2009 YTD Total Flat Volume Decline - 8.0% -10.5 -3.4 -8.8

7.  Significant Volume Decline Drives New Analyses  Concern - Not Over-deploy FSS Units  Due Diligence Re-Direction Process ● Comprehensive Modeling ● Local Area Specific Knowledge  Identify Other Influences and Impacts Associated with Redirection Decisions FSS Phase 1 Capacity / Deployment Review

8.  Volume Decline Trend Continues in FY 2009  Election Year – Impacts October Volume?  January & February More Predictable Volume Information  Industry Input is Valuable FSS Phase 1 Capacity / Deployment Review

9. What New on RIBBS?

10. Pre-production & Production Program Update Dulles P &DC

11. Dulles FSS Status Preprod FSS Install & Operational Complete 1 st Production FSS Install & Ramp-up Complete Acceptance Test Dec 2008 2 nd Production FSS Installation Complete 3 rd Production FSS Installation In-progress

12. Dulles Operational Ramp-up  Production FSS Seven Sort Schemes ●10 Delivery Units ●19 Zones Sort SchemeZones Reston Annex20191, 20194 Fairfax Main22030, 22035, 22038 Sterling Main Reston Main 20164, 20167 20190, 20195 McLean22101, 22109 Burke Culpeper 22009, 22015 22701 Alexandria – Belle View Alexandria – Engleside 22307 22309 Falls Church22040, 22043, 22046  Preproduction FSS Four Sort Schemes ●3 Delivery Units ●4 Zones Sort SchemeZones Arlington - South22204 Arlington – North22207 Manassas20109, 20110

13. Dulles Installs & Ramp-ups Continue  FSS 2 Installed ●Burn-in Starts February  FSS 3 Installed ●Burn-in Starts in March  Migration of Current Zones to FSS 2 & 3  Adding Additional Zones in April  Uninstall the Pre-Production FSS Mid-March  FSS 4 Install after Removal of Pre-Prod - Ready in July

14. National Postal Forum 2009 Planning National Postal Forum ® ®

15. NPF 2009 - Flats Track

16. Flats Track – NPF 2009  Flats Track for Periodicals, Catalogs & Printers  Targeted Workshops to Support all Flat Mailers  Total of 12 Workshops  Certificate Program ● Participants Required to Attend a Total of 4 Workshops and the Tuesday General Session to Receive Certificate

17. NPF 2009 - Flats Track Workshops Day of WorkshopSunday Monday Workshop Title Printers Expand into Mailing 10 Steps to Success Periodical Pricing Co-mail Co-Pallet Co-Binding USPS Flats Strategy Addressing Standards for Flats (Includes IMB) Future Prep & Entry for Flats Speakers Mary Ann Bennett Rita Cohen David Strauss Erv Drewek Dale Miller Rosa Fulton TBD Sharon Daniel Krista Finazzo Joe Schick Krista Finazzo Day of WorkshopTuesday MondayWednesday Workshop Title Building Your Periodical Business Optimizing Postage Savings, Small Volume Periodicals Nuts & Bolts of Periodicals Managing Postal Budget & Cost Reduction Opportunities Future of Catalogs The Skinny on Slim Jims Speakers Joyce McGarvey Jerry Lease Max Health Sharon Daniel Dennis Farley Charles Tricamo Matthew Morrone Susan Thomas David Shoenfeld Hamilton Davison Mike Winn

18. Conclusion