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Understanding the USPS® : The rewards of change March 12, 2013

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PresenterJanet Lockhart-Jones joined Pitney Bowes in September 2012 to fulfill the cross-enterprise role ofCurriculum Manager, Postal Education. In this capacity, Janet serves as a postal subject matterexpert to PB employees and clients.Janet’s professional career includes 20 years of employment with the United States Postal Service,fulfilling various roles in accounting, software systems and quality improvement. She also spent 12years in the private sector as a successful management consultant and corporate trainer.Janet holds the degrees of Doctor of Education, Master of Science in Human ResourcesManagement and Bachelor of Science in Business. She is a member of the Sacramento and SanFrancisco Postal Customer Councils, a member of Mail Systems Management Association(MSMA), a Certified Mailpiece Design Consultant (MDC), and will be a speaker at the 2013National Postal Forum in San Francisco and at MAILCOM 2013 in April in Atlantic City. 2

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Agenda 2012 in reflection 2013 changes and opportunities Looking ahead to 2014; more change, more opportunity Pitney Bowes Support options Q/A 3

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2012 Postal Facts!* $65B Revenue 160 billion pieces of mail 152 million delivery points and growing (654,000 new DPs) Package services revenue increased by 8.7 percent in fiscal 2012, compared to 2011 (increased by 244 million pieces) Moves about 40% of the World’s mail volume Core of an $800 billion industry with 8 million employees More retail outlets than McDonalds and Starbucks combined Has ‘delivered’ through 237 years of change 2004 – 2011 USPS ranked in the Top Ten Firms Most Trusted for Privacy (http://ponemon.org/research-studies-white-papers). Amount of tax revenue received to operate = $0 USPS 2012 Annual Report to Congress 4

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* USPS 2012 Annual Report to Congress

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Mail Volume Realities* * Courtesy of postaladvocate.com 6

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Processing Center Closures Targeted cost reductions: $2.1billion 7

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2013 – The Present Intelligent Mail® barcode Intelligent Mail® package barcode 8

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USPS changes 2013 - Tracking label changesWhat is USPS doing –• Revising Mailing Standards to require the use on an Intelligent Mail® unique tracking barcode on all commercial parcels, except Standard Mail® parcels, claiming presort or destination entry pricing.What does this mean to our Clients –• Delivery Confirmation is now USPS Tracking™• Clients will be transitioned over time into new label requirements as they become available• Once complete, our Clients will be able to track all packages shipped via USPS with greater specificity.PB Support plan-• USPS Delivery confirmation labels are currently being rebranded• Pitney Bowes will start providing the new rebranded labels as they become available .• Clients with meters are granted a “grace period” of 1 year ( January 2014) to comply with new label requirements.• For Clients with shipping solutions (Send Suite, etc.), the waiver is through October 2013.• During the grace period current labels will be accepted with no interruption to service 2013 Transition Current: USPS Delivery Confirmation label Sample: New USPS Tracking label

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2013 – The Present Continued Intelligent Mail® barcode Intelligent Mail® package barcode Package Services Revenue is increasing Number of delivery points are increasing as volume and revenue decreases More facility consolidations and closures Service delivery may change from 1–3 days to 2-3 days Local Post Office hours may change Six new USPS Promotions Innovations Proposal to eliminate Saturday delivery of letters to residences and businesses January 2014 Full-Service IMb™ requirements 10

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2013 – The Present Continued Intelligent Mail® barcode Intelligent Mail® package barcode Package Services Revenue is increasing Number of delivery points are increasing as volume and revenue decreases More facility consolidations and closures Service delivery may change from 1–3 days to 2-3 days Local Post Office hours may change Six new Customer promotions for 2013 Proposal to eliminate Saturday delivery of letters to residences and businesses Innovations Prepare for January 2014 Full-Service IMb™ requirements 11

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2013 USPS Calendar of Promotions  A year full of saving and growth opportunities  Embrace and test new technologies for consumer engagement  Marry mail with mobile, connect print to digital, and put your business in the hands of your customers 12

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Meet your goals… and save Direct Mail delivers strongest ROI for acquisition, contact and retention (Target Marketing 2012 Annual Media Usage Survey) 80% of households say they read or scan mail daily (Mail Moment Study 2011-2012) U.S. Mobile Commerce sales will grow 98.6% to reach $20.85B (Internet Retailer 9/12) 59% of consumers enjoy getting mail from brands about new products (Epsilon Channel Preference Study 12/11) 13

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USPS® 2013 Promotions CalendarMARCH-APRIL AUGUST-SEPTEMBER•Mobile Coupons • Emerging Technologies -Local & national retailers APRIL-JUNE -Retailers, e-tailers & & businesses Earned Value Reply catalogers NOVEMBER-DECEMBER• Click-to-Call Mail • Product Samples • Mobile Buy-It-Now -Insurance, Financial -Financials, -CPGs, Retailers - Retailers, e-tailers & Catalogers, • Picture Permit catalogers Publishers -Existing customers 15

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Marry mail with mobile 16

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Mobile Coupon and Click to Call Mobile Coupon: Mail contains mobile technology that delivers a coupon redeemable in-store or online when scanned Click-to-call: Mail links directly to a mobile-optimized website with a “click to call” or brings up a phone number automatically in the user’s phone Registration Period: Jan. 15 - April 30, 2013 Program Period: March 1 - April 30, 2013 Discount: 2 % postage discount 17

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Earned Value Reply Mail Mailers earn credit for BRM and CRM counted during normal mail processing Registered permits and Mailer IDs required Credit applied post-promotion to Permit Imprint account for future mailing Registration Period: Jan. 1, 2013 - March 31, 2013 Program Period: April 1 - June 30, 2013 Credit Amount: $0.02 per mailpiece scanned Image Source Page: http://www.postcardmania.com/submitting-art/templates.php/4x9-rackcard/templates.php?type=Cards&group=2 18

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Emerging Technologies Near-Field Communication: Mail contains NFC smart tag or RFID chip enabling info transmission to mobile device Augmented Reality: Mail facilitates a user experience combining virtual & real time interactive, registered in 3-D Authentication Component: Mail enables user to complete identity/authentication process Registration Begins: June 1, 2013 Program Period: Aug. 1 – Sept. 30, 2013 Discount Amount: 2% of eligible postage Image Source Page: http://www.gizchina.com/2011/04/22/senscape-chinas-augmented-reality-platform/ 19

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Picture Permit* Mail contains customized permit indicia area with company logos, trademarks or brands (color images only) Pre-testing and design approval required 6 month lead time recommended Customers must be approved mailers Registration Begins: June 1, 2013 (by invitation only)* Program Period: Aug. 1 – Sept. 30, 2013 Discount Amount: Per piece fee waived 20

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Product Samples  Standard Mail® regular and Nonprofit marketing parcels containing product samples. USPS has new Simple Samples options and pricing.  Trial size product (or other item) to incite recipients to purchase a product/service, form a belief/opinion, or take an action  Registration Begins: May 1, 2013  Program Period: Aug. 1 – Sept. 30, 2013  Discount Amount: 5% off eligible postage 21

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Mobile Buy It Now  Mobile barcode or similar print technology takes consumer to mobile-optimized site for product purchase  Tangible items that can be shipped via USPS products (delivery by the USPS not required).  Registration Begins: September 15, 2013  Program Period: Nov. 1 – Dec. 31, 2013  Discount Amount: 2% off total postage 22

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Recommendations for you… Take advantage of promotions to enhance your marketing efforts Increase circulation, support other advertising efforts Embrace new technology on the back of a proven workhorse--test new strategies at a lower cost. Strengthen your branding efforts Include easy-to-use reply pieces Put your product in consumers’ hands Let direct mail be the foundation for your ecommerce/engagement efforts 23

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2013 – The Present Continued Intelligent Mail® barcode Intelligent Mail® package barcode Package Services Revenue is increasing Number of delivery points are increasing as volume and revenue decreases More facility consolidations and closures Service delivery may change from 1–3 days to 2-3 days Local Post Office hours may change Six new Customer promotions for 2013 Innovations Proposal to eliminate Saturday delivery of letters to residences and businesses Prepare for January 2014 Full-Service IMb™ requirements 24

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Digital Retail Delivery 25

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2013 – The Present Continued Intelligent Mail® barcode Intelligent Mail® package barcode Package Services Revenue is increasing Number of delivery points are increasing as volume and revenue decreases More facility consolidations and closures Service delivery may change from 1–3 days to 2-3 days Local Post Office hours may change Six new Customer promotions for 2013 Innovations Proposal to eliminate Saturday delivery of letters to residences and businesses Prepare for January 2014 Full-Service IMb™ requirements 26

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Change in Saturday Delivery (proposed)Proposed changes No changesNo Saturday letter mail delivery to The USPS® will still process and transportresidences or offices mail on SaturdaysNo residential or office mail pick up on Parcels, packages, Priority Mail® andSaturdays Express Mail® will still be delivered on SaturdaysNo schedule ‘blue box’ collections on Post Offices will remain open for customersSaturday or Sunday as per normal scheduleAny mail accepted at Post Offices on a Mail will still be delivered to PO Boxes onSaturday will be processed on Monday Saturday Bulk mail and drop ship at USPS facilities will continue on Saturdays and Sundays Remittance mail that is P.O. Box addressed will remain available seven days/week 80% of consumers polled are OK with this proposal!

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Recommendations Plan ahead Understand delivery times – add IMb™ Tracing Watch the clock Automate to expedite - Use the Intelligent Mail® barcode Assess your incoming mail flow Know your options – Consider Priority Mail® or Express Mail® Engage with your customers

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2014 – The Future 29

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Automation Changes ™ Full-Service IMb required for automation discountsJanuary 2014- proposed ** Full Service Intelligent Mail® compliance Unique IMb™ for mailpieces and handling units Electronic submission of postal documentation Electronic scheduling of drop shipments**Federal Register Volume 77, Number 77 issued (Friday April 20, 2012) 30

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Overview of Intelligent Mail  A technology platform made possible by the suite of Intelligent Mail barcodes for mailpieces, handling units (trays and sacks) and containers.BARCODE SERVICE SERIAL ROUTING TYPE ID MAILER ID ID NUMBER CODE Intelligent Mail Barcode for Mailpieces PROCESSING ZIP CODE CONTENT ID MAILER ID LABEL TYPE CODE Intelligent Mail Barcode on Handling Units APPLICATION TYPE SERIAL MAILER ID IDENTIFIER INDICATOR NUMBER Intelligent Mail Barcode for Containers 31

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Summary – Basic vs. Full-ServiceRequirements Basic Full-ServiceIM™BC on mailpiece Required Required- uniqueIM™ tray barcode on labels Optional Required- uniqueIM container barcode on placards Optional Required- uniqueElectronic documentation Optional Required(E-Doc for mailing submission)Start-the-Clock NA Available(shows USPS possession ofmailing)IMB Tracing (Tracking) Available AvailableAddress correction Optional for a fee Available(ACS electronic updates)Postal incentives (discounts) Available Greatest incentives 32

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Why Full-Service IMb™?Benefits to Mailers Benefits to the USPS®Status information as mail progresses through the Visibility = enhanced diagnostics of servicesystem performanceTracking of individual pieces and trays based on Scan information = identification of operationalscans performed on larger containers bottlenecksVisibility – respond to customer inquiries on the Real-time alerts to operations = ability to respondstatus of valuable bills, statements, catalogs and and avoid potential service failurespublicationsFree address change information and tracking Advance notification of volumes and makeup ofinformation from mail entry to final destination commercial mail = improved resource planningWaiver of annual mailing fee for permits where all Simplified mail acceptance processespostage statements contain 90% or more FullService piecesE-docs + Full Service supports Seamless The ability to measure service performance foracceptance and eInduction; both paperless each Full-Service mailer.processesMaximum price discounts Substantial operational cost reductions 33

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March 12, 2013

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Pitney Bowes SolutionsSoftware Solution – by name IMB only benefits Additional TrackMyMail benefitsSmartMailer • Supports Basic and Full • Outbound tracking –( presort service quantities only or, use PB • Supports USPS e-docs via FIRST) mail.xml • End User OR Reseller. May have reseller branded site. • SmartMailer Manages the entire/IMb Assignment • Fully integrated for customer- Easy to usePlanet Press • Supports Basic and Full • Outbound and Inbound service Tracking • Supports USPS e-docs via • ACS – address correction mail.xml service (for basic service) • Fully integrated tracking and document compositionSyntel • Supports Basic and Full • Outbound tracking service • Supports USPS e-docs via mail.xml

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TrackMyMail™Optional reporting from Pitney Bowes for IMb™ Tracing service.Easily view aggregate reports or view individual mailpieces as theymove through the USPS. National View of Delivery Date of Delivery Early, On-Time, Late Delivery Individual Delivery

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Access Forum Archives forums.pb.com 37

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