## THE FUTURE OF MAIL 

Over the past decade, I have worked hard to promote the mailing industry and foster a spirit of partnership with the national posts around the world. 

We have built a strong partnership with the U.S. Postal Service. Postal reform, a package of legislation providing a blueprint for a modernized, more efficient Postal Service, could dramatically improve our mail-related opportunities. We also are paying close attention to the European posts, particularly in light of the fact that the legal and regulatory environments in Europe are expected to change significantly over the next two years. 

Mail has a bright future as a critical communication channel. Contrary to common perceptions, the rise in electronic forms of communication has not led to a reduction in overall mail volumes. While mail is declining as a percentage of overall message volumes, absolute volumes continue to increase. In 2004, the U.S. Postal Service experienced four consecutive quarters of increasing volumes. 

I believe that stable postal rates can result in even higher mail volumes for the following reasons: 

> Organizations are increasingly finding mail to be an exceptionally effective medium for building and strengthening stakeholder relationships. Businesses that were not large mailers in the past, like small retailers, are learning about the power of mail. 

> The trend toward remote commerce creates another opportunity for mail, since videos, digital photos, prescription drugs and many other items ordered online must be shipped. Our very successful partnership with eBay to provide Internet postage services is a good example of how we are taking advantage of this trend. 

> Remote voting is growing in popularity, with more and more states liberalizing their election laws to 

accommodate voting by mail. In 2004, we launched a suite of products that helps ensure that the right ballot gets to the right voter on time and helps verify that the person returning the ballot is in fact the right registered voter. 

> Transaction mail volumes are proving to be surprisingly resilient. For every consumer who shifts to electronic bill presentment or payment, there seems to be a comparable increase in mailings for health claims, satellite TV or radio subscriptions, gift card mailings, and the like. 

## ALIGNMENT AND FOCUS 

During 2004, we consolidated all our operating activities, allowing us to take a more integrated approach to serving our 2 million customers world- wide. As part of this move, our Board of Directors elected Murray Martin as President and Chief Operating Officer in October. He is responsible for all 

MAIL HAS A BRIGHT FUTURE AS A CRITICAL COMMUNICATION CHANNEL 

of our lines of business throughout the world and will drive an integrated strategy in collaboration with key staff and business leaders. 

In another move, we announced that we are pursuing an investor-sponsored spin-off of our Capital Services business. 

## GOVERNANCE AND LEADERS 

I am pleased to say that we continue to be recognized for our leadership 

