Operating and Financial Highlights

• Canada Post experienced a continued deterioration in its core Canada Post segment in 2010.
• Earnings before taxes in the Canada Post segment were $233 million in 2010, down 27% from 2009.
• Volumes in our domestic Lettermail business decreased by 4.5% from 2009. That marked the fourth consecutive year-over-year decrease in domestic Lettermail volumes and fifth consecutive year of decrease in volumes per address in Canada.
• Overall volumes fell in the Canada Post segment by 1.8% from 2009 levels. Volumes declined by 4.0% in Transaction Mail and by 2.8% in Parcels. Volumes rose by 0.1% in Direct Marketing, but were well below pre-recession levels.
• Cost of operations in the Canada Post segment rose by $159 million from 2009 mainly due to an increase in employee future benefit costs. This more than offset the impacts of cost-containment efforts and productivity improvements.
• Canada Post contributed $746 million in cash to the Canada Post segment pension plan, including $425 million in special payments to begin addressing a pension solvency deficit of $3.2 billion (as of Dec. 31, 2010). Total contributions to the pension plan were more than three times as large as earnings before tax in the Canada Post segment.
• Increased payments to the pension plan were largely responsible for a 130.6% decrease in cash provided by operating activities in The Canada Post Group.
• Canada Post fell short of its Lettermail service delivery target for the first time in more than 10 years, posting a 95.7% on-time delivery performance, compared to a target of 96%.
• Consolidated net income for The Canada Post Group for the year ended December 31, 2010 was $439 million, driven by a non-cash income tax entry of $192 million.
• Consolidated revenue from operations reached $7.5 billion, an increase of 1.9% from 2009. The increase in revenue was mainly due to price increases but was offset by volume declines.
• The Canada Post Group delivered 10.6 billion pieces of mail, parcels and messages to more than 15 million residential and business addresses in 2010.
• Revenue in the Purolator segment increased by 4.1% from 2009 levels and contributed $72 million to Canada Post’s consolidated income before taxes, up $19 million from 2009.
• The Logistics segment reported revenue of $149 million, a decrease of $2 million from 2009.

Other Highlights

• With about 69,000 employees, The Canada Post Group is one of the largest employers in the country. The Canada Post segment achieved its target of reducing the number of lost-time accidents by 15%.
• Canada Post was named one of the Best 50 Corporate Citizens in Canada by Corporate Knights and was selected as one of Canada's Best Diversity Employers.
• In 2010, Canada Post raised $2.2 million for mental health, the company’s cause of choice, and distributed money raised for mental health in 2009 to 32 community organizations across the country. The Corporation also supported literacy, the Canada Post Freestyle Team and United Way.

ERRATUM NOTE: The "A note about our profit" section on page 7 of the printed version of the Annual Report incorrectly states that cash provided by operating activities in 2010 in The Canada Post Group decreased by $177 million from 2009 levels. The correct amount is $175 million. The error has been corrected in the online version of the report.