1. ® Distribution of Stamps MTAC May 19, 2010 Myrna Murphy

2. Agenda Distribution of Stamps  Stock Level Management  Internal Stamp Distribution Network Consolidation 2

3. Stock Levels  Fewer stamps being sold –Reduced 1 st class mail volume –Increased PVI & Meter use because of airmail security rules –Alternate access reduces window transactions  Need to reduce cost –Cost to count, ship & store excessive stock –Increased exposure to loss  Managing Inventory is a common business practice  Policy was published in PB 22148 February 17 2005 USPS improved the controls on stock levels due to:

4. Stock Levels  Formula –Limits to 3 months sales in stamp stock on hand –Allows extra for the holiday period (Q1) –Based on SPLY –Formula generally allows for normal sales volume  Example –Q1 (Oct-Dec) 2009 Stamp Sales = $20K, Max Stamp Accountability Q1 2010 = $20K on any day in Q1 –Q2-4 (Jan-Sep)2009 Stamp Sales = $45K (avg quarterly sales = $15K), Max Stamp Accountability Q2-4 2010 = $15K on any day in period The maximum stock level for a postal retail unit is determined by a formula.

5. Stamp Fulfillment Network Consolidation  Gain workforce reduction & efficiency improvements –Implement better fulfillment processes –Decrease labor requirements through economies of scale –Leverage technology and equipment investments  Improve inventory management –Decrease safety stock –Reduce stamp destruction costs 5 USPS is consolidating the stamp fulfillment network in order to:

6.  Dec 2009 Kansas City, MO  Jan 2010 Dulles, VA  Mar 2010 Atlanta, GA Note: Alaska, Hawaii, and Puerto Rico SDO’s are not impacted  Apr 2010 Binghamton, NY  May 2010 Phoenix, AZ  Jun 2010 Portland, OR Consolidated Sites Stamp Fulfillment Network 6

7.  Stock Limits allows for inventory of all currently available stamps  Scheduled stamp orders fulfilled on monthly basis  Stamp Distribution Centers ship: –Special Orders received by 3 pm shipped same day via Priority Mail –Express Mail or expedited transportation, if necessary Mailing Community Impact Neither stock limits nor the consolidation should have any impact for routine stamp purchases. Special orders may require a longer lead time.

8. Questions ? 8