1CONFIDENTIAL Technical Committee February 21, 2012 CPC Plant (South Central) Toronto, ON

2CONFIDENTIAL Welcome and Opening Remarks Today’s Purpose: Update on Business Reply Mail – Card testing “Giving back the envelope” – upcoming modifications to machineable specifications Addressing Recognition

3CONFIDENTIAL Agenda TIME Topic & Speakers 1:00 pm (30 min) Welcome and Opening Remarks Introductions About this meeting Ian Kerr – General Manager, Process Engineering Gerry Gervais – General Manager, Commercial Products 1:30 (60 min) Business Reply Mail – Card Testing Update Todd MacGillivray – Manager, Standard Equipment Engineering Break (15 min) 2:45 (30 min) Giving Back the Envelope Todd MacGillivray – Manager, Standard Equipment Engineering 3:15 (45 min) Addressing Recognition Zal Vesuna – Director, Plant Transportation Network Systems Wrap up

4CONFIDENTIAL Technical Committee Topics Addressing, Reading, Mail Flow (induct, inject, etc), Mechanization Sorting S/L & O/S, Containerization, Presorting, Labelling, Delivery, Video Encoding Scanning, Mail characteristics – Physical Testing Paper Printing Inserting Collating Manufacturing (envelope) Specifications

5CONFIDENTIAL Update on Business Reply Mail – Card Testing Todd MacGillivray Manager, Standard Equipment Engineering

6CONFIDENTIAL Business Reply Mail – Card Testing  During the last Technical Committee discussion, Canada Post committed to do more extensive testing to investigate if light-weight paper stock can still be used for BRCs of certain sizes  Also, Canada Post was to look into how paper grain direction affects processing capabilities of cards on the MLOCRs

7CONFIDENTIAL Business Reply Mail – Process Flow

8CONFIDENTIAL  Total Damaged = percentage of pieces that were bent, had tears or missing/bent corners  Total OK = percentage of pieces delivered with both front and back barcodes  Total Not Readable = percentage of pieces that had incomplete or skewed barcodes, or one of the barcodes was missing  Total No Barcodes = percentage of pieces that had no barcodes at all (possibly rejected at the feeder and processed manually). Business Reply Card Testing – Test #1 Results Sample Width, mm Length, mm Weight, g Grain Direction Total Damaged Total OK Total Not Readable Total No Barcodes A Long1%52%25%23% B Short4%49%12%39% C Long4%61%20%19% D Short5%55%21%24% E Long3%49%19%33% F Short7%46%22%32% Currently, we have completed test #1 on Business Reply card stock with 111 gms paper weight. The test included: 3 different card sizes different grain directions (grain direction long and grain direction short) replicated end-to-end live mail stream process (versus lab) ~2000 test cards were sent through the mail stream (6 different scenarios – A, B, C, D, E, F)

9CONFIDENTIAL Business Reply Card Testing – Test #1 Results (Cont’d) SampleWidth, mmLength, mm Grain Direction A114152Long B114152Short C108165Long D108165Short E90153Long F90153Short

10CONFIDENTIAL Business Reply Card Testing – Test #1 Results (Cont’d) Test results show:  Card stock with paper weight of 111 gms did not prove to be suitable for efficient processing on Canada Post’s mechanized equipment  Up to 7% of light-weight cards may be damaged during mail processing  Size and aspect ratio along with the grain direction have a slight impact on the overall performance  Larger cards (that meet 2 g weight requirement) with grain direction long have better performing results and less chance to get damaged (based on this sampling)

11CONFIDENTIAL Business Reply Mail – Card Testing – Test #2  Held conference call with US mailers to obtain their input  The USPS requires small reply cards to meet “Gurley” requirement. Gurley paper stock should perform better than non-Gurley paper on the postal equipment  The Gurley reading measures the porosity or air-permeability of paper  In the US, the paper industry standard for paper meeting the “Gurley” requirement is a Gurley reading of 16 to 22 Gurley Surface Roughness Porosity

12CONFIDENTIAL USPS Comparison BRM paper requirements  Canada Postal Standards do not include “Stock”, “Bursting strength”, and “Porosity”

13CONFIDENTIAL  2 test decks (gurley and non-gurley Business Reply Card stock) was provided by US customers to test on our equipment  The preliminary results show that paper porosity may impact the processing capabilities of paper  More tests are currently being done to investigate if paper porosity may impact BRCs processing performance  The results of the test will be shared with the Technical Committee at the next meeting or prior to via Business Reply Mail – Card Testing – Test #2 (Cont…d)

14CONFIDENTIAL Giving Back the Envelope Todd MacGillivray Manager, Standard Equipment Engineering

15CONFIDENTIAL Giving Back the Envelope – New Machineable Specifications Effective Now  As of January 2012, we allow graphics and dark colours to the right and below the address block 2011 Specifications Specifications effective January 16, 2012* Quiet Zone Within and Around the Address Block Leave clear of printing and dark colours the Quiet Zone located within and around the address block, as follows: 13 mm to the left of the address block 6 mm above the top line of the address block the entire area to the right of the address block the entire area below the address block. Quiet Zone for Barcoding Leave clear of printing and dark colours the area where Canada Post’s automated equipment applies a fluorescent barcode: Quiet Zone Within and Around the Address Block Leave clear of printing and dark colours the Quiet Zone located within and around the address block, as follows: 13 mm to the left and 13 mm to the right of the address block 6 mm above the top line and 6 mm below the bottom line of the address block customers wishing to print text to the right and below the address block must provide samples to Canada Post for testing and approval prior to depositing the mailing. Quiet Zone for Barcoding on the front side of the item: the area 19 mm high by 105 mm long measured from the bottom right edge. Leave clear of printing and dark colours the area where Canada Post’s automated equipment applies a fluorescent barcode: on the front side of the item: the area 19 mm high by 150 mm long measured from the bottom right edge. Leave clear of printing and dark colours the Quiet Zone located within and around the address block, as follows: * The new machineable specifications only apply to mailings deposited at Canada Post sites that have new mail sorting equipment.  Also, all types of fonts are now acceptable for address printing, provided all characters are clear and have a space no smaller than 0.1 mm between them; font size is set between 10 and 14 pts; and no bold, underlined, italic, or script/decorative fonts are used.

16CONFIDENTIAL Giving Back the Envelope – Modifications in Machineable Specifications – Coming Soon  We continue to work on modifying machineable specifications for Short and Long items to provide more flexibility  New standards will be coming effective January 2013 or sooner and may include:  vertical address orientation  coins as acceptable enclosures  and more!

17CONFIDENTIAL Address Recognition For Letters Zal Vesuna – Director, Plant Transportation Network Systems

18CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics The following Addressing Characteristics will be discussed: 1) Address Orientation 2) Address Block Shape 3) Address Block Location 4) Address Block Line Spacing 5) Multiple Address Blocks 6) Address Block Within Windows 7) Address Syntax 8) Address Content

19CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Orientation Normal address (rightside up and left to right) orientation is assumed and preferred The following indicia and payment methods may be used to determine mail orientation in priority as listed: – FIM (Canadian and US) – 2D Stamp (future) – ePostage (future) – 2D Permit (future) – 2D Digital Meter Indicium – Postage Payment Indicium – Postage Stamp

20CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Block Shape Left margin aligned relative to address orientation Trapezoidal (Top and Bottom edges parallel relative to address orientation)

21CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Block Location Below Return Address or Company Name/Logo Same orientation as payment method Below payment method relative to orientation

22CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Block Location continued … Sender and receiver address blocks at the same level may cause incorrect address block selection or prevent address block selection

23CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Block Location continued … Sender and receiver address blocks should be well separated with sufficient whitespace regardless of windows

24CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Block Line Spacing Address lines should not be touching Address lines should be evenly spaced relatively close to each other Address lines should not be too short or long relative to each other

25CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Block Line Spacing continued … Address lines should not be touching Address lines should be evenly spaced relatively close to each other Address lines should not be too short or long relative to each other Short line may impact address reading and correlation

26CONFIDENTIAL Short line may impact address reading and correlation Second address block impacts correct address selection Address Recognition – Preferred Addressing Characteristics Multiple Address Blocks Multiple address block candidates may impact correct address block selection or prevent address block selection

27CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Blocks Within Windows Inserts should be formatted, folded, and sized correctly for the address window, otherwise inserts may shift and the address block may not be completely visible within the address window impacting read performance

28CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Address Blocks Within Windows continued … Inserts should be formatted, folded, and sized correctly for the address window, otherwise the address block may not be the only text appearing in the window including other obstructions such as lines or fields and this may impact reading performance

29CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Addressing Syntax The following guidelines may be used in addition to or in place of the current Canada Post Addressing Guidelines: – Avoid using commas and instead use blanks as separators to prevent character/word misinterpretation – Example: Instead of “Ottawa,ON” use “Ottawa ON” -Brackets should be avoided to avoid character/word misinterpretation Example: Instead of “(Quebec)” use “Quebec” – In general punctuation should be avoided if possible to prevent character/word misinterpretation other than dashes – Address lines should not wrap more than one line or be broken within address fields – Example: – Avoid breaking an address line between house number and street name – Avoid breaking an address line between PO Box and token and PO Box number – Avoid breaking an address line between RR (Rural Route) and RR number – Avoid breaking an address line between municipality and province – Avoid using non Canada Post recognized abbreviated names – The last line within a domestic address block should contain a postal code, or city, province and postal code. Avoid using “Canada” in domestic addresses and avoid separating the postal code from the rest of the address block. – The last line within a US or Foreign address should only contain a Canada Post recognized country name in French or English

30CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Addressing Content In the past it was not as important to have the complete address valid – Customers may be addressing to all house numbers, apartments/suites within ranges, regardless of their existence With the introduction of Point of Call (POC) addressing it is imperative that all addressing content is valid, otherwise letters may be rejected or redirected to a different Postal Code (PC) or POC by the OCR – The OCR will attempt to validate, correct, or reject a letter based on house number, apartment number/suite number, and even business name if other address information is missing or cannot be read

31CONFIDENTIAL Address Recognition – Preferred Addressing Characteristics Addressing Content continued … It is imperative that the complete address content and syntax is valid, otherwise the OCR may redirect the letter to a different PC or POC OCR may read the PO Box number as and redirect the letter to Postal Code L4Y0A5