Management's Discussion and Analysis (cont’d) 5.4 PERFORMANCE By SEgMENT Canadian Operations U.S. Operations Outlook 1 39 ANNUAL REPORT 2011 (All currency amounts in this section are in U.S. dollars,  unless otherwise noted) Our U.S. operations had external sales of $376.3 million in  2011, including the Viking and Icelandic USA Acquisitions,  compared to $291.4 million in 2010. Viking added $37.5  million to our sales in 2011 compared to $1.7 million in 2010.  The Icelandic USA Acquisition added $8.7 million to our  sales in 2011. Sales volume for the year, including Viking but  excluding the Icelandic USA Acquisition, increased by 20.5%  to 128.3 million pounds compared to 106.5 million pounds  in the 2010. Viking accounted for a 13.1% increase in volume  and 6.6% increase in sales value. Our base business volume  grew 7.4% in pounds and 9.0% in dollars. Our U.S. food service operations, including Viking but  excluding the Icelandic USA Acquisition, recorded an  increase in sales pounds of 28.1% in 2011. Viking accounted  for 24.2% of the increase in volume, with the base business  growing 3.9%. This continues to be a positive development  Over the past year, we saw growth in both food service and  retail businesses in the U.S. and we expect 1  that strength to  continue into 2012 with the addition of  Viking  and  Icelandic  Seafood  brands of products as well as the strength in our  High Liner  and  FPI  businesses. In Canada, while we recorded  a turnaround positive 4.1% overall sales growth in 2011  due to improvement in our food service business, our retail  operations remained under pressure due to increased selling  prices and a more competitive retail environment. Our  Canadian retail business gained strength as 2011 progressed,  following a disappointing first quarter. To address this, we  increased our marketing initiatives to drive volume in stores,  launched value-pack commodity products that can compete  with trader labels, and reformulated some items to achieve  more competitive price points. We expect these initiatives,  and the introduction of new products in 2012, to result in  Our operating results are strong and our success with  strategic initiatives in 2011 help position us for 2012 and  beyond. Our focus will now be on integrating the Icelandic  USA Acquisition and benefitting from expected synergies  resulting from the combined operations. We expect a  majority of the synergies to be achieved over the next two  years, with total ongoing annual synergies thereafter in the  range of US$16-$18 million.  Adjusted EBITDA 4  in our Canadian operations for 2011 was  $25.4 million compared to $25.0 million for the previous year.  Although Adjusted EBITDA 4  is relatively flat compared to  2011, it increased as result of higher overall sales volumes,  cost-reduction strategies, new product introductions, lower  exchange rates that effectively reduced our product cost, and  lower stock option expense of $3.1 million. However, EBITDA  decreased as a result of investments we made in expanding  distribution for the High Liner brand in our retail operations.  Our retail operations were challenged in 2011, principally in  the uncoated fillet category. We increased selling prices in  2009 and 2010, especially on uncoated fillets, which resulted  in price increases at the consumer level that allowed cheaper  private label and trader labels to gain market share in the  category. To counteract this increase in competition, we  invested sales and marketing funds to drive more volume  through our customers’ stores, launched new value-pack  commodity items to better compete with trader labels, and  reformulated some products to have more competitive price  points. We expect 1  our investment in these initiatives to  result in higher retail volume in 2012. Our Canadian operations had external sales of $296.0 million  in 2011, compared to $284.4 million in the previous year,  representing an increase of 4.1%. The improvement in sales  is a reversal of the decline experienced in fiscal 2010. Sales  volume was relatively unchanged from 2011 at 69.9 million  pounds compared to the previous year. Canadian food service  sales volume increased by 5.5% in pounds, as the economic  activity in Canada increased relative to 2010. Retail sales  pounds decreased by 6.2% relative to the same period last  year, due to consumers’ responses to increased prices and competition. as it represents the first year of growth since the start of the  economic downturn, and we continue to remain cautiously  optimistic that the worst of the recession in the United States  is behind us and that consumers will be eating away from  home more often. The increase in our base business was led  by our distributor businesses. Our national accounts business  was down by volume as these channels were particularly hit  by the economic conditions.  U.S. retail operations experienced a 12.1% increase in sales  volume in 2011. We experienced growth for our branded  products in traditional grocery stores of 17.8% during the  quarter as we expanded distribution for our  Fisher Boy  and  Sea Cuisine  products, and also launched additional new  products. We ran a television and radio advertising campaign  in 2011 to increase  Fisher Boy  brand awareness and increase  sales. The ad campaign was very positive, in our opinion,  justifying the incremental investment spent in marketing  during the year relative to the previous year. Sales to club  stores increased more than 20% in volume during 2011 as  a result of new product launches, increased distribution for  existing products, and strong sales for seasonal products.  Sales volume for our private label products was in line with  that of 2010, increasing by 2.5%.  Adjusted EBITDA 4  for the U.S. operations for the year was  $29.5 million compared to $21.5 million in 2010, an increase  of 37.0%. Adjusted EBITDA 4  improved due to an increase  in sales volume, largely coming from Viking. A stronger  Canadian dollar decreased Adjusted EBITDA 4  in Canadian  dollars by CAD$0.9 million. In addition, stock option expense  in 2011 was $0.3 million lower than in 2010.