processing, automated accounting for payment of postage, and transmittal of electronic image files that are forwarded to customers via secure electronic servers.

     Repositionable Notes give First-Class Mail and Standard Mail services an extra edge. Repositionable Notes are specially-designed and applied "Post-It" type notes that let mailers affix a message to the outside of the envelope, calling attention to the mailer's product or service, address, telephone number, or Web site and inviting customers to look inside. The note can then be repositioned to a refrigerator, computer, telephone or calendar and will serve as a handy reminder of the promotion, information, or offer, even after the original mailpiece is discarded. After concluding a successful oneyear pilot test, Repositionable Notes was officially launched as a new product in April 2003.

     Flat-size mail¹ falls into five traditional categories or applications: magazines, newspapers, catalogs, large envelopes, and other promotional pieces. The Postal Service processes and delivers approximately 51.6 billion flat-size mailpieces each year (some 25 percent of all mail volume) which amounts to roughly $15 billion dollars in postage annually.

     In combination with area Marketing and Operations functions, quarterly focus group meetings are conducted with industry representatives to discuss flat-size mail issues. Attendees describe these meetings as some of the best industry-focused information exchanges held by the Postal Service to identify service performance issues and uncover areas for product and service improvements.

     The Postal Service remains the primary delivery vehicle for Periodicals mail. Periodicals are valuable "anchors" in the mailbox because they are products to which consumers subscribe and that they look forward to receiving. The Postal Service processes and delivers more than 9 billion Periodicals mailpieces annually. Working closely with the periodicals industry, the Postal Service continues to identify opportunities for cost reductions, service improvements, and business growth. Over the past year, the Postal Service has worked with cross-functional groups and customers on such efforts as the nationwide expansion of ePUBWATCH, Magazine Subscription Online, Flat Sequencing System (FSS), Delivery Point Packaging (DPP), market research, co-palletization, package integrity, service measurement, mail irregularity feedback, and promotion of existing products such as the ride-along rate.

     The Postal Service delivers approximately 16 billion catalogs each year. These pieces represent more than 30 percent of all flatsize mail. This is an extremely important and growing category of mail for the Postal Service. In 2003, the Postal Service collaborated with key industry representatives on several process efficiencies, including the development of a communications package titled Guidelines for Optimizing Readability of Flat-Size Mail, which included a brochure, video, and poster highlighting address and barcode quality issues for flat-size pieces. Recommendations for the design of flat-size mail for automation-compatibility will be a companion communications package to be completed in 2004. Working with industry, Postal Service efforts will continue with programs such as co-palletizing mixed classes of flat-size mail, and co-packaging mixed classes to reduce the overall cost of