Quad/Graphics Urges Congress to Act Swiftly to Restore Financial Stability and Long-Term Sustainability to the U.S. Postal

  Quad/Graphics Urges Congress to Act Swiftly to Restore Financial Stability
  and Long-Term Sustainability to the U.S. Postal Service

Company CEO Joel Quadracci Testifies on Capitol Hill about the Postal
Service’s Importance to Private Industry and the U.S. Economy

Business Wire

SUSSEX, Wis. -- February 20, 2013

Quad/Graphics Chairman, President & CEO Joel Quadracci urges Congress to move
swiftly to put the U.S. Postal Service (USPS) on a path to sustainability,
noting that the $65 billion Postal Service is at the core of a $1.3 trillion
mailing industry that provides family-supporting jobs for 8.4 million
Americans, nearly 200,000 of whom live and work in Wisconsin.

Quadracci shared his insights on the importance of the U.S. Postal Service to
private industry and the U.S. economy at the Senate Homeland Security and
Governmental Affairs Committee’s hearing on “Solutions to the Crisis Facing
the U.S. Postal Service” on February 13. He was the only printer and member of
private industry invited to testify.

“The Postal Service is the backbone for a large portion of the private sector
and plays an integral role in our economy, extending across every type of
mailer and the printing, paper and technology industries that supply them,”
Quadracci said in written testimony provided in advance of the hearing. “These
businesses support services in a marketplace that include cost-effective
advertising, magazines, catalogs, e-commerce and prescription drug
fulfillment, as well as what is still a huge amount of statements, bills and
greeting cards, and an expanding package delivery segment.”

Quadracci believes ensuring the viability of the USPS is not a partisan issue
and that Congress has the ability to not only save a proud American
institution, but also support and promote a vibrant private sector.

The businessman’s home state of Wisconsin is in a unique position with respect
to meaningful postal reform as both its senators serve on the Homeland
Security and Government Affairs Committee. In fact, Senator Tammy Baldwin
(D-Wisconsin) met directly with Quadracci following the hearing to better
understand the importance of the Postal Service to the Wisconsin business
community and the U.S. economy as a whole.

During his oral testimony, Quadracci said that while print is changing and
will continue to evolve in our multichannel world, it is still an effective
marketing and communications medium – and one that connects and integrates
well with other media channels. However, as marketers lose confidence in the
long-term sustainability of the Postal Service, they may choose to redirect
their marketing spend to other channels. “The uncertainty is there and they’re
not sure what to do,” he said of marketers who are seeking the best channels
for maximizing response rates and revenues. If postage costs begin to outweigh
the benefits from increased response, for example, marketers may move away
from printed mailings to other media channels, he explained. “The competition
is real and it is out there,” Quadracci told the committee.

Among the core elements of postal reform Quadracci would like Congress to
implement are:

  *Ensuring the USPS has the authority to streamline its operations. The USPS
    has infrastructure and capacity to handle and process 300 billion pieces
    of mail annually. According to USPS estimates, mail volume will only be
    153 billion pieces in 2013. It’s important that the USPS be able to
    right-size its operations, Quadracci said.
  *Lengthening the amount of time the USPS has to pre-fund healthcare
    benefits for retirees. The current 10-year amortization schedule has
    resulted in unaffordable $5.5 billion annual payments on which the USPS
    has already defaulted twice. Extending payments over a longer period of
    time would relieve some short-term financial pressure while still enabling
    the USPS to meet its retiree benefit obligations long-term.
  *Providing the USPS the flexibility to manage escalating healthcare costs
    without disadvantaging employees or retirees. Quadracci shared that it is
    possible to improve the quality of healthcare while reducing costs. “Too
    much of healthcare talk has been about who pays for what as opposed to how
    do you pull the costs out. There are ways to pull out costs,” Quadracci
    said, citing Quad/Graphics’ own success with focusing on preventive care
    through its 23-year-old QuadMed subsidiary.
  *Addressing volume declines by maintaining the postage rate caps and
    pricing flexibility the USPS needs to develop new products and services
    and, ultimately, attract more business. Quadracci noted that the USPS’ use
    of pricing incentives to promote QR-coded mail works. He cited the example
    of a client who used a QR code on a mailer to link shoppers to a product
    demonstration video. The client saw an approximate 20 percent increase in
    sales of the featured product.

Acknowledging that postal reform is a complex issue, Quadracci nonetheless
urged the committee to move forward as fast as possible to solidify the USPS’
future. The long-term success of the USPS is critically important for the
United States, he said.

About Quad/Graphics

Quad/Graphics (NYSE: QUAD) is a global provider of print and related
multichannel solutions for consumer magazines, special interest publications,
catalogs, retail ad inserts, direct mail, books, directories, and commercial
and specialty products, including in-store solutions. Headquartered in Sussex,
Wis. (just west of Milwaukee), the Company has print-production facilities as
well as other support locations throughout North America, Latin America and
Europe. As a printing industry innovator, Quad/Graphics (www.QG.com) is
redefining the power of print in today’s multimedia world by helping its
clients use print as the foundation of multichannel communications strategies
to drive their top-line revenues while reducing their total cost of print
production through workflow solutions, and pioneering distribution and mailing
programs, among other offerings.

Contact:

Government Affairs Contact:
Patrick Henderson
Director of Government Affairs, Quad/Graphics
414-566-2345 / Patrick.Henderson@qg.com
or
Postal Affairs Contact:
Joe Schick
Director of Postal Affairs, Quad/Graphics
414-566-4134 / Joe.Schick@qg.com
or
Media Contact:
Claire Ho
Director of Corporate Communications, Quad/Graphics
414-566-2955 / Claire.Ho@qg.com
or
Investor Relations Contact:
Kelly Vanderboom
Vice President & Treasurer, Quad/Graphics
414-566-2464 / Kelly.Vanderboom@qg.com
 
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