TSX: MFI
www.mapleleaffoods.com
TORONTO, Feb. 28, 2012 /CNW/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the fourth quarter and fiscal year ended December 31, 2011.
- Full year Adjusted EPS(1) increased by 40% to $1.01
- Fourth quarter Adjusted Earnings per Share decreased to $0.21 from $0.27 last year
- Adjusted Operating Earnings(2) for the year increased 21%, despite an 18% decline in the fourth quarter
- Net earnings for the fourth quarter decreased to $9.2 million, which included $32.2 million of pre-tax restructuring charges, from $30.6 million in the fourth quarter last year
- Net earnings for the year increased to $87.3 million, which included $79.8 million of pre-tax restructuring charges, from $35.6 million last year
"We are very pleased with our results for the year and we remain on track to deliver our earnings and margin growth for 2012 through 2015," said Michael H. McCain, President and CEO. "We realized strong earnings growth for the year in our protein operations, which contributed to a 40% rise in our adjusted earnings per share. However, we experienced a challenging fourth quarter as a result of unseasonably strong raw material costs which impacted continued margin growth in prepared meats. We also experienced short term higher operating costs in our bakery business. These factors, combined with lower pork and poultry processing margins from year ago highs, contributed to lower relative performance in the fourth quarter. We are now actively passing through pricing to help mitigate these challenges and we remain committed to executing our value creation initiatives."
(1): Adjusted Earnings per Share ("Adjusted EPS") measures are defined as basic earnings per share adjusted for the impact of restructuring and other related costs and associated gains, the impact of the change in fair value of non-designated interest rate swaps, unrealized (gains) losses on commodity futures contracts, and the change in fair value of biological assets, net of tax and non-controlling interest.
(2): Adjusted Operating Earnings measures are defined as earnings from operations before restructuring and other related costs and associated gains, other income and the impact of the change in fair value of non-designated interest rate swaps, unrealized (gains) losses on commodity futures contracts and the change in fair value of biological assets.
Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release.
Financial Overview
Sales for the fourth quarter increased 3% to $1,245.3 million compared to $1,212.0 million last year. After adjusting for the impacts of divestitures and foreign exchange, sales increased by 5%, primarily as a result of higher selling prices. For the full year, sales were $4,893.6 million, down 2% from $4,968.1 million in 2010. After adjusting for divestitures and foreign exchange, this represented an increase of 5%.
Adjusted Operating Earnings for the fourth quarter were $57.4 million compared to $69.9 million last year, as weaker pork and poultry margins and unexpectedly high meat input costs during the quarter led to lower earnings in the Protein Group. For the full year, Adjusted Operating Earnings increased 21%, to $259.0 million compared to $214.5 million last year, reflecting strong results in the Protein Group.
Adjusted Earnings per Share were $0.21 in the quarter, compared to $0.27 last year. For the year, Adjusted Earnings per Share were $1.01, which included $12.2 million ($0.09 per share) of tax adjustments related to a prior acquisition, compared to $0.73 last year.
For the fourth quarter, net earnings were $9.2 million ($0.06 basic earnings per share) compared to $30.6 million ($0.21 basic earnings per share) last year. Net earnings included $32.2 million ($0.17 per share) of pre-tax costs related to restructuring activities (2010: $19.7 million, or $0.11 per share). For the full year, net earnings were $87.3 million ($0.59 basic earnings per share) compared to $35.6 million ($0.22 basic earnings per share) last year. Net earnings included $79.8 million ($0.41 per share) of pre-tax costs related to restructuring activities (2010: $81.1 million).
Several items are excluded from the discussions of underlying earnings performance. These include restructuring charges, mark-to-market adjustments on hedging contracts that are not designated in a hedging relationship and mark-to-market adjustments related to biological assets. Restructuring charges are excluded as they do not reflect the continuing earnings performance of the business. Mark-to-market adjustments do not reflect the economic effect of the hedging transactions and are excluded from earnings discussions until the underlying asset is sold or transferred. Refer to the section entitled Reconciliation of Non-IFRS Financial Measures in this news release.
Business Segment Review
Following is a summary of sales by business segment:
| Fourth Quarter (Unaudited) |
Year-to-Date (Audited) |
|||
| ($ thousands) | 2011 | 2010 | 2011 | 2010 |
| Meat Products Group | $781,813 | $762,561 | $3,039,460 | $3,181,134 |
| Agribusiness Group | 63,499 | 56,167 | 259,644 | 199,498 |
| Protein Group | $845,312 | $818,728 | $3,299,104 | $3,380,632 |
| Bakery Products Group | 400,016 | 393,307 | 1,594,520 | 1,587,487 |
| Sales | $1,245,328 | $1,212,035 | $4,893,624 | $4,968,119 |
The following table summarizes Adjusted Operating Earnings by business segment:
| Fourth Quarter (Unaudited) |
Year-to-Date (Audited) |
|||
| ($ thousands) | 2011 | 2010 | 2011 | 2010 |
| Meat Products Group | $27,472 | $37,707 | $95,987 | $81,281 |
| Agribusiness Group | 14,744 | 14,896 | 81,895 | 50,505 |
| Protein Group | $42,216 | $52,603 | $177,882 | $131,786 |
| Bakery Products Group | 16,129 | 22,416 | 86,294 | 94,399 |
| Non-allocated Costs in Adjusted Operating Earnings(i) | (898) | (5,097) | (5,160) | (11,706) |
| Adjusted Operating Earnings | $57,447 | $69,922 | $259,016 | $214,479 |
| (i) | Non-allocated costs in Adjusted Operating Earnings comprise costs related to systems conversion and consulting fees. Management believes that not allocating these costs provides a more comparable assessment of operating results. |
Meat Products Group
Includes value-added prepared meats, lunch kits; and fresh pork, poultry and turkey products sold to retail, foodservice, industrial and convenience channels. Includes leading Canadian brands such as Maple Leaf ®, Schneiders ® and many leading sub-brands.
Meat Products Group sales for the fourth quarter increased 3% to $781.8 million from $762.6 million in the fourth quarter last year. After adjusting for the impact of the sale of the Company's Ontario primary pork processing operation and a weaker Canadian dollar, sales increased by 5% due to higher market prices in fresh pork and price increases and improved sales mix in prepared meats. These benefits were partly offset by lower sales volumes in primary processing, while prepared meats sales volumes were consistent with last year.
Adjusted Operating Earnings in the Meat Products Group for the fourth quarter decreased by 27% to $27.5 million, compared to $37.7 million last year, mostly due to lower poultry and pork primary processing margins. Earnings from poultry primary processing operations were significantly lower due to higher live bird costs that peaked during the fourth quarter of 2011, and were not recovered by higher meat values.
Although still at reasonable levels, primary pork processing packer margins in North America were lower than the very significant levels reached in the fourth quarter of 2010. Lower processor margins were partly offset by stronger pork export markets and improved product sales mix.
Fourth quarter earnings in prepared meats were consistent with last year, although the trend of increasing earnings in this business was interrupted in the fourth quarter. While selling prices are seasonally reduced as meat costs typically decline towards year end, fresh meat input costs continued to be unexpectedly high, which impacted margins. Despite the rise in raw material costs compared to last year, the prepared meats business achieved significant earnings growth in 2011, benefiting from increased selling prices, new product innovation and improved sales mix, and early benefits from ongoing simplification of product lines and network consolidation. In the first quarter of 2012, management intends to implement price increases to address higher raw material costs.
For the full year, Adjusted Operating Earnings in the Meat Products Group increased 18% to $96.0 million compared to $81.3 million last year, driven by better sales mix and the early benefits of transformation initiatives in the prepared meats business, as well as strong pork processing results earlier in the year.
Agribusiness Group
Consists of Canadian hog production and animal by-product recycling operations.
Sales in the Agribusiness Group increased 13% to $63.5 million for the fourth quarter of 2011 compared to $56.2 million last year, due to higher selling prices for both bio-diesel and rendered products. Sales volumes declined slightly in the fourth quarter, primarily in the rendering operations.
Adjusted Operating Earnings in the Agribusiness Group in the fourth quarter were $14.7 million compared to $14.9 million last year, as earnings improvements in hog production were offset by lower earnings in by-product recycling operations. Hog production operations benefited from higher hog prices, while earnings in by-products recycling declined slightly as volumes declined and the strong market values for both bio-diesel and rendered products experienced during most of 2011 began easing.
Adjusted Operating Earnings for the year increased 62% to $81.9 million compared to $50.5 million last year, driven by the strong market values for bio-diesel and rendered by-products experienced for most of the year.
Bakery Products Group
Includes fresh and frozen bakery products, including breads, rolls, bagels, specialty and artisan breads, sweet goods, and fresh pasta and sauces sold to retail, foodservice and convenience channels. It includes national brands such as Dempster's®, Tenderflake®, Olivieri® and New York Bakery CoTM, and many leading regional brands.
Bakery Products Group sales for the fourth quarter increased 2% to $400.0 million compared to $393.3 million last year. After adjusting for the sale of the Company's fresh sandwich product line in February 2011 and currency translation on sales in the U.S. and U.K., sales increased 4%, primarily due to price increases implemented earlier in 2011. This increase was offset slightly by lower sales volumes and a change in sales mix compared to last year.
Adjusted Operating Earnings in the Bakery Products Group for the fourth quarter declined 28% to $16.1 million, compared to $22.4 million last year. Margins during the quarter were compressed as price increases implemented earlier in 2011 were not sufficient to fully offset higher raw material and other inflationary costs, primarily in the frozen bakery business. Management intends to implement further price increases in this business commencing in early 2012. Earnings were also impacted by approximately $4.0 million of duplicative overhead costs associated with the transition to the Company's new fresh bakery in Hamilton, Ontario, and by approximately $2.5 million in costs due to supply chain disruptions related to the installation of SAP in the fresh bakery operations in Western Canada. These additional costs were partly offset by efficiency gains related to network optimization initiatives in the frozen bakery operations, and overall lower selling, general and administrative expenses due to cost reduction initiatives implemented earlier in 2011. The sale of the fresh sandwich product line in the first quarter of 2011 was accretive to earnings.
For the quarter, the Company continued to operate three smaller bakeries in the Greater Toronto Area as it gradually consolidates production at its new fresh bakery in Hamilton, Ontario. During this period the Company is incurring incremental overhead costs, which will be eliminated once all three bakeries are closed. Two of these plants closed in the first quarter of 2012, and the remaining bakery is expected to close in early 2013. The duplicative costs are consistent with management's expectations.
The incremental costs related to the SAP implementation primarily affected the fourth quarter as they were specific to disruptions related to installation of the system in Western Canada, and are not expected to materially impact 2012.
As previously announced, during the fourth quarter of 2011, the fresh bakery business also decommissioned and transferred production from its Delta, B.C., plant, to its other bakeries in Langley, B.C. and Edmonton, Alberta.
During the quarter the Company decided that it will close its bakery in Walsall, U.K. in early 2012 as part of the transition to optimize the manufacturing of morning goods and specialty bakery products and expects to incur approximately $12.7 million in pre-tax restructuring and other related costs, $6.8 million of which will be cash expenses.
For the full year, Adjusted Operating Earnings decreased 9% to $86.3 million compared to $94.4 million last year, largely due to higher input costs that were not fully recovered by price increases.
Subsequent Events
On February 1, 2012, the Company purchased the operations of a poultry farm in Alberta that included a chicken quota. The total purchase price was $31.1 million paid in cash which will be accounted for as a business combination in accordance with IFRS 3, Business Combinations in the first quarter of 2012. The Company has not yet finalized the allocation of this purchase price.
On February 7, 2012, the Company announced that it will consolidate its further processed poultry operations, closing a facility in Ontario in May 2012, and transferring production to two other Ontario-based facilities. Investments totaling approximately $6.5 million will be made to support the production transfers. In addition, the Company will incur approximately $5.6 million before taxes in restructuring costs, of which approximately $4.2 million are cash costs.
Other Matters
On February 27, 2012, Maple Leaf Foods Inc. declared a dividend of $0.04 per share payable March 30, 2012 to shareholders of record at the close of business March 12, 2012. Unless indicated otherwise by the Company in writing on or before the time the dividend is paid, the dividend will be considered an Eligible Dividend for the purposes of the "Enhanced Dividend Tax Credit System".
An investor presentation related to the Company's fourth quarter financial results is available at www.mapleleaffoods.com and can be found under Investor Relations on the Quarterly Results page. A conference call will be held at 2:30 p.m. EDT on February 28, 2012 to review Maple Leaf Foods' fourth quarter financial results. To participate in the call, please dial 416-340-8018 or 866-223-7781. For those unable to participate, playback will be made available an hour after the event at 905-694-9451 / 800-408-3053 (Passcode 2453483).
A webcast presentation of the fourth quarter financial results will also be available at http://investor.mapleleaf.ca via a link: http://www.media-server.com/m/p/2r322554
The Company's full financial statements and related Management's Discussion and Analysis are available for download on the Company's website.
Reconciliation of Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted Operating Earnings and Adjusted EPS. Management believes that these non-IFRS measures provide useful information to both Management and investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.
Adjusted Operating Earnings
The following table reconciles earnings from operations before restructuring and other related costs and associated gains, other income (expense) and the impact of the change in fair value of non-designated interest rate swaps, unrealized (gains) losses on commodity futures contracts and the change in fair value of biological assets to net earnings as reported under IFRS in the unaudited earnings for the three month periods ended as indicated below. Management believes that this is the most appropriate basis on which to evaluate operating results, as restructuring and other related costs, other income (expense) and the change in fair value of non-designated interest rate swaps, unrealized (gains) losses on commodity futures contracts and the change in fair value of biological assets are not representative of operational results during the period.
| (Unaudited) | Three months ended December 31, 2011 | ||||
| ($ thousands) | Meat Products Group |
Agribusiness Group |
Bakery Products Group |
Unallocated costs |
Consolidated |
| Net earnings | $9,195 | ||||
| Income taxes | 7,410 | ||||
| Earnings from operations before income taxes | $ 16,605 | ||||
| Interest expense | 17,795 | ||||
| Change in the fair value of non-designated interest rate swaps | (422) | ||||
| Other income | (4,459) | (215) | (50) | (381) | (5,105) |
| Restructuring and other related costs | 18,835 | - | 12,161 | 1,197 | 32,193 |
| Earnings from Operations | $ 27,472 | $14,744 | $16,129 | $2,721 | $61,066 |
| (Increase) decrease in fair value of biological assets | - | - | - | (67) | (67) |
| Unrealized (gains) losses on commodity futures contracts | - | - | - | (3,552) | (3,552) |
| Adjusted Operating Earnings | $ 27,472 | $14,744 | $ 16,129 | $ (898) | $ 57,447 |
| (Unaudited) | Three months ended December 31, 2010 | ||||
| ($ thousands) | Meat Products Group |
Agribusiness Group |
Bakery Products Group |
Unallocated costs |
Consolidated |
| Net earnings | $ 30,643 | ||||
| Income taxes | 13,112 | ||||
| Earnings from operations before income taxes | $ 43,755 | ||||
| Interest expense | 16,085 | ||||
| Change in the fair value of non-designated interest rate swaps | (10,408) | ||||
| Other income | 148 | (188) | 137 | 225 | 322 |
| Restructuring and other related costs | 17,551 | - | 2,527 | (376) | 19,702 |
| Earnings from Operations | $ 37,707 | $ 14,896 | $ 22,416 | $ (5,563) | $ 69,456 |
| (Increase) decrease in fair value of biological assets | - | - | - | (713) | (713) |
| Unrealized (gains) losses on commodity futures contracts | - | - | - | 1,179 | 1,179 |
| Adjusted Operating Earnings | $ 37,707 | $ 14,896 | $ 22,416 | $ (5,097) | $ 69,922 |
Adjusted Earnings per Share
The following table reconciles Adjusted Earnings per Share to basic earnings per share as reported under IFRS as indicated below. Management believes this is the most appropriate basis on which to evaluate financial results as restructuring and other related costs and associated gains, the changes in the fair value of non-designated interest rate swaps, unrealized (gains) losses on commodity futures contracts and the change in fair value of biological assets net of tax and non-controlling interests are not representative of operational results.
| Three months ended December 31, (Unaudited) |
Full year ended December 31, (Audited) |
|||
| ($ per share) | 2011 | 2010 | 2011 | 2010 |
| Basic earnings per share | $ 0.06 | $ 0.21 | $0.59 | $ 0.22 |
| Restructuring and other related costs(i) | 0.17 | 0.11 | 0.41 | 0.44 |
| Gains associated with restructuring and other related activities(ii) | - | - | (0.02) | - |
| Change in the fair value of non-designated interest rate swaps(iii) | - | (0.05) | 0.06 | 0.13 |
| Change in the fair value of unrealized (gains) losses on commodity futures contracts(iii) | (0.02) | 0.01 | (0.03) | - |
| Change in the fair value of biological assets (iii) | - | - | 0.01 | (0.06) |
| Adjusted Earnings per Share (iv) | $ 0.21 | $ 0.27 | $1.01 | $ 0.73 |
| (i) | Includes per share impact of restructuring and other related costs, net of tax and non-controlling interest. |
| (ii) | Gains associated with restructuring and other related activities are net of tax. |
| (iii) | Includes per share impact of the change in fair value of non-designated interest rate swaps, unrealized (gains) losses on commodity futures contracts and the change in fair value of biological assets, net of tax. |
| (iv) | May not add due to rounding. |
Forward-Looking Statements
This document contains, and the Company's oral and written public communications often contain, "forward-looking information" within the meaning of applicable securities law. These statements are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates and beliefs and assumptions made by the Management of the Company. Such statements include, but are not limited to, statements with respect to objectives and goals, as well as statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates and intentions. Specific forward-looking information in this document includes, but is not limited to, statements with respect to the anticipated benefits, timing, actions, costs and investments associated with the Company's Value Creation Plan, expectations regarding improving business trends, expectations regarding actions to reduce costs, restore and/or promote volumes and/or increase prices, improve efficiencies, expected duplicative overhead costs incurred due to the concurrent operation of the new Hamilton fresh bakery and existing bakeries, the expected use of cash balances, source of funds for ongoing business requirements, capital investments and debt repayment, and expectations regarding sufficiency of the allowance for uncollectible accounts. Words such as "expect", "anticipate", "intend", "attempt", "may", "will", "plan", "believe", "seek", "estimate", and variations of such words and similar expressions are intended to identify such forward-looking information. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict.
In addition, these statements and expectations concerning the performance of the Company's business in general are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, U.S., U.K. and Japanese economies; the rate of exchange of the Canadian dollar to the U.S. dollar, U.K. British pound and the Japanese yen; the availability and prices of raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related market conditions; improvement of operating efficiencies whether as a result of the Value Creation Plan or otherwise; continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing litigation; no unexpected actions of domestic and foreign governments; and the general assumption that none of the risks identified below or elsewhere in this document will materialize. All of these assumptions have been derived from information currently available to the Company including information obtained by the Company from third-party sources. These assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those expressed, implied or forecasted in such forward-looking information, which reflect the Company's expectations only as of the date hereof.
Factors that could cause actual results or outcomes to differ materially from the results expressed, implied or forecasted by forward-looking information is discussed more fully in the Company's Annual Management's Discussion and Analysis for the period ended December 31, 2011 including the section entitled "Risk Factors", that are updated each quarter in the Management's Discussion and Analysis, and are available on SEDAR at www.sedar.com. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information, whether written or oral, or whether as a result of new information, future events or otherwise except as required by law.
Maple Leaf Foods Inc. ("Maple Leaf" or the "Company") is a leading Canadian value-added meat, meals and bakery company committed to delivering quality food products to consumers around the world. Headquartered in Toronto, Canada, the Company employs approximately 19,500 people at its operations across Canada and in the United States, Europe and Asia.
Consolidated Financial Statements
(Expressed in Canadian dollars)
MAPLE LEAF FOODS INC.
Three and twelve months ended December 31, 2011 and 2010
MAPLE LEAF FOODS INC.
Consolidated Balance Sheets
(In thousands of Canadian dollars)
| |
|
|
|
|
As at December 31, 2011 |
|
As at December 31, 2010 |
|
As at January 1, 2010 |
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | - | $ | - | $ | 29,316 | |||
| Accounts receivable | 133,504 | 108,739 | 372,330 | ||||||
| Notes receivable | 98,545 | 109,012 | - | ||||||
| Inventories | 293,231 | 275,643 | 298,320 | ||||||
| Biological assets | 49,265 | 45,440 | 42,568 | ||||||
| Income and other taxes recoverable | 43,789 | 29,957 | 18,067 | ||||||
| Prepaid expenses and other assets | 24,688 | 14,766 | 15,328 | ||||||
| $ | 643,022 | $ | 583,557 | $ | 775,929 | ||||
| Property and equipment | 1,067,246 | 1,042,886 | 1,102,032 | ||||||
| Investment property | 11,232 | 6,832 | 6,646 | ||||||
| Employee benefits | 133,942 | 173,243 | 206,584 | ||||||
| Other long-term assets | 11,926 | 9,455 | 8,220 | ||||||
| Deferred tax asset | 127,456 | 101,848 | 83,330 | ||||||
| Goodwill | 753,739 | 752,911 | 755,059 | ||||||
| Intangible assets | 191,896 | 164,178 | 137,239 | ||||||
| Total assets | $ | 2,940,459 | $ | 2,834,910 | $ | 3,075,039 | |||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities | |||||||||
| Bank indebtedness | $ | 36,404 | $ | 15,858 | $ | 4,247 | |||
| Accounts payable and accruals | 482,059 | 475,980 | 633,247 | ||||||
| Provisions | 44,255 | 39,822 | 25,511 | ||||||
| Current portion of long-term debt | 5,618 | 496,835 | 206,147 | ||||||
| Other current liabilities | 20,409 | 63,465 | 37,837 | ||||||
| $ | 588,745 | $ | 1,091,960 | $ | 906,989 | ||||
| Long-term debt | 941,956 | 389,078 | 834,557 | ||||||
| Employee benefits | 350,853 | 224,407 | 203,577 | ||||||
| Provisions | 28,936 | 26,452 | 27,022 | ||||||
| Other long-term liabilities | 88,153 | 89,839 | 89,781 | ||||||
| Deferred tax liability | 11,703 | 26,402 | 31,310 | ||||||
| Total liabilities | $ | 2,010,346 | $ | 1,848,138 | $ | 2,093,236 | |||
| Shareholders' equity | |||||||||
| Share capital | $ | 902,810 | $ | 902,810 | $ | 869,353 | |||
| Retained earnings (deficit) | (78,674) | (5,267) | 24,076 | ||||||
| Contributed surplus | 64,327 | 59,002 | 57,486 | ||||||
| Accumulated other comprehensive loss | (17,042) | (22,585) | (5,055) | ||||||
| Treasury stock | (6,347) | (10,078) | (24,499) | ||||||
| Total shareholders' equity | $ | 865,074 | $ | 923,882 | $ | 921,361 | |||
| Non-controlling interest | 65,039 | 62,890 | 60,442 | ||||||
| Total equity | $ | 930,113 | $ | 986,772 | $ | 981,803 | |||
| Total liabilities and equity | $ | 2,940,459 | $ | 2,834,910 | $ | 3,075,039 | |||
MAPLE LEAF FOODS INC.
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except share amounts)
| Three months ended | Twelve months ended | |||||||||||||
| December 31, | December 31, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||
| Sales | $ | 1,245,328 | $ | 1,212,035 | $ | 4,893,624 | $ | 4,968,119 | ||||||
| Cost of goods sold | 1,058,687 | 1,004,998 | 4,126,460 | 4,219,237 | ||||||||||
| Gross margin | $ | 186,641 | $ | 207,037 | $ | 767,164 | $ | 748,882 | ||||||
| Selling, general and administrative expenses | 125,575 | 137,581 | 504,194 | 523,450 | ||||||||||
| Earnings before the following: | $ | 61,066 | $ | 69,456 | $ | 262,970 | $ | 225,432 | ||||||
| Restructuring and other related costs | (32,193) | (19,702) | (79,795) | (81,108) | ||||||||||
| Change in fair value of non-designated interest rate swaps | 422 | 10,408 | (10,960) | (24,922) | ||||||||||
| Other income (expense) | 5,105 | (322) | 10,332 | 162 | ||||||||||
| Earnings before interest and income taxes | $ | 34,400 | $ | 59,840 | $ | 182,547 | $ | 119,564 | ||||||
| Interest expense | 17,795 | 16,085 | 70,747 | 64,874 | ||||||||||
| Earnings before income taxes | $ | 16,605 | $ | 43,755 | $ | 111,800 | $ | 54,690 | ||||||
| Income taxes | 7,410 | 13,112 | 24,469 | 19,077 | ||||||||||
| Net earnings | $ | 9,195 | $ | 30,643 | $ | 87,331 | $ | 35,613 | ||||||
| Attributed to: | ||||||||||||||
| Common shareholders | $ | 8,426 | $ | 29,255 | $ | 82,134 | $ | 29,310 | ||||||
| Non-controlling interest | 769 | 1,388 | 5,197 | 6,303 | ||||||||||
| $ | 9,195 | $ | 30,643 | $ | 87,331 | $ | 35,613 | |||||||
| Earnings per share attributable to common shareholders | ||||||||||||||
| Basic earnings per share | $ | 0.06 | $ | 0.21 | $ | 0.59 | $ | 0.22 | ||||||
| Diluted earnings per share | $ | 0.06 | $ | 0.21 | $ | 0.58 | $ | 0.21 | ||||||
| Weighted average number of shares (millions) | 138.1 | 136.6 | 138.7 | 135.6 | ||||||||||
MAPLE LEAF FOODS INC.
Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars)
| Three months ended | Twelve months ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Net earnings | $ | 9,195 | $ | 30,643 | $ | 87,331 | $ | 35,613 | ||||
| Other comprehensive (loss) income | ||||||||||||
| Change in accumulated foreign currency translation adjustment | $ | (4,434) | $ | (7,676) | $ | 5,651 | $ | (14,197) | ||||
| Change in unrealized gains and losses on cash flow hedges | 5,154 | (7,049) | 282 | (4,208) | ||||||||
| Change in asset ceiling and minimum funding requirements | 12,680 | 29,832 | 12,680 | 29,832 | ||||||||
| Change in actuarial gains and losses | 6,127 | (63,525) | (128,832) | (63,525) | ||||||||
| $ | 19,527 | $ | (48,418) | $ | (110,219) | $ | (52,098) | |||||
| Comprehensive income (loss) | $ | 28,722 | $ | (17,775) | $ | (22,888) | $ | (16,485) | ||||
| Attributed to: | ||||||||||||
| Common shareholders | $ | 28,619 | $ | (18,124) | $ | (26,979) | $ | (21,031) | ||||
| Non-controlling interest | 103 | 349 | 4,091 | 4,546 | ||||||||
MAPLE LEAF FOODS INC.
Consolidated Statements of Changes in Total Equity
(In thousands of Canadian dollars)
| Attributable to Common Shareholders | ||||||||||||||||
| Share capital |
|
Retained earnings |
|
Contributed surplus |
Total accumulated other comprehensive loss |
Treasury stock |
Non- controlling interest |
|
Total equity |
|||||||
| Balance at January 1, 2011 | $ | 902,810 | $ | (5,267) | $ | 59,002 | $ | (22,585) | $ | (10,078) | $ | 62,890 | $ | 986,772 | ||
| Net earnings | - | 82,134 | - | - | - | 5,197 | 87,331 | |||||||||
| Other comprehensive income (loss) | - | (114,656) | - | 5,543 | - | (1,106) | (110,219) | |||||||||
| Dividends declared ($0.16 per share) | - | (22,386) | - | - | - | (1,830) | (24,216) | |||||||||
| Stock-based compensation expense | - | - | 19,393 | - | - | - | 19,393 | |||||||||
| Decrease in minority interest | - | - | - | - | - | (112) | (112) | |||||||||
| Issue of stock from treasury | (18,499) | (14,068) | - | 32,567 | - | - | ||||||||||
| Re-purchase of treasury stock | - | - | - | - | (28,836) | - | (28,836) | |||||||||
| Balance at December 31, 2011 | $ | 902,810 | $ | (78,674) | $ | 64,327 | $ | (17,042) | $ | (6,347) | $ | 65,039 | $ | 930,113 | ||
| Attributable to Common Shareholders | ||||||||||||||||
| Share capital |
Retained earnings |
Contributed surplus |
Total accumulated other comprehensive loss |
Treasury stock |
Non- controlling interest |
Total equity |
||||||||||
| Balance at January 1, 2010 | $ | 869,353 | $ | 24,076 | $ | 57,486 | $ | (5,055) | $ | (24,499) | $ | 60,442 | $ | 981,803 | ||
| Net earnings | - | 29,310 | - | - | - | 6,303 | 35,613 | |||||||||
| Other comprehensive loss | - | (32,811) | - | (17,530) | - | (1,757) | (52,098) | |||||||||
| Dividends declared ($0.16 per share) | - | (21,677) | - | - | - | (747) | (22,424) | |||||||||
| Stock-based compensation expense | - | - | 15,936 | - | - | - | 15,936 | |||||||||
| Share options exercised | 3,288 | - | - | - | - | - | 3,288 | |||||||||
| Subscription receipts and warrants | 30,156 | - | (2,157) | - | - | - | 27,999 | |||||||||
| Shares issued from treasury | 13 | - | (13) | - | - | - | - | |||||||||
| Premium on shares issued from Restricted Share Unit Trust | - | (2,665) | (12,250) | - | 14,915 | - | - | |||||||||
| Re-purchase of treasury stock | - | - | - | - | (494) | - | (494) | |||||||||
| Increase in subsidiary interest | - | (1,500) | - | - | - | (1,351) | (2,851) | |||||||||
| Balance at December 31, 2010 | $ | 902,810 | $ | (5,267) | $ | 59,002 | $ | (22,585) | $ | (10,078) | $ | 62,890 | $ | 986,772 | ||
MAPLE LEAF FOODS INC.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
| Three months ended | Twelve months ended | ||||||||||
| December 31, | December 31, | ||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| CASH PROVIDED BY (USED IN): | |||||||||||
| Operating activities | |||||||||||
| Net earnings | $ | 9,195 | $ | 30,643 | $ | 87,331 | $ | 35,613 | |||
| Add (deduct) items not affecting cash: | |||||||||||
| Change in fair value of biological assets | (67) | (712) | 1,027 | (10,841) | |||||||
| Depreciation and amortization | 28,368 | 34,420 | 125,990 | 143,211 | |||||||
| Stock-based compensation | 6,575 | 3,952 | 19,393 | 15,936 | |||||||
| Deferred income taxes | (6,050) | 7,786 | 5,896 | (10,953) | |||||||
| Income tax current | 13,460 | 5,326 | 18,573 | 30,030 | |||||||
| Interest expense | 17,795 | 16,085 | 70,747 | 64,874 | |||||||
| Loss (gain) on sale of property and equipment | (3,221) | 798 | (6,987) | (217) | |||||||
| Change in fair value of non-designated interest rate swaps | (423) | (10,408) | 10,959 | 24,922 | |||||||
| Change in fair value of derivative financial instruments | (6,756) | 533 | (3,924) | 1,096 | |||||||
| Decrease (increase) in pension asset | 6,545 | (350) | 10,364 | 7,006 | |||||||
| Net income taxes paid | 1,096 | (13,779) | (17,703) | (39,298) | |||||||
| Interest paid | (21,381) | (23,922) | (57,969) | (60,812) | |||||||
| Change in provision for restructuring and other related costs | 22,925 | 12,920 | 43,563 | 60,823 | |||||||
| Other | (2,826) | (1,656) | (6,540) | (2,729) | |||||||
| Change in non-cash operating working capital | 13,644 | 1,112 | (55,886) | 26,519 | |||||||
| Cash provided by operating activities | $ | 78,879 | $ | 62,748 | $ | 244,834 | $ | 285,180 | |||
| Financing activities | |||||||||||
| Dividends paid | $ | (5,470) | $ | (5,434) | $ | (22,386) | $ | (21,677) | |||
| Dividends paid to non-controlling interest | (508) | (149) | (1,830) | (747) | |||||||
| Net increase (decrease) in long-term debt | (26,846) | (60,385) | 5,195 | (168,764) | |||||||
| Increase in share capital | - | 28,014 | - | 31,287 | |||||||
| Increase in financing costs | (214) | (899) | (6,610) | (2,656) | |||||||
| Purchase of treasury stock | - | - | (28,836) | (494) | |||||||
| Other | (366) | (1,157) | (1,512) | (1,439) | |||||||
| Cash used in financing activities | $ | (33,404) | $ | (40,010) | $ | (55,979) | $ | (164,490) | |||
| Investing activities | |||||||||||
| Additions to long-term assets | $ | (68,588) | $ | (42,367) | $ | (229,171) | $ | (162,304) | |||
| Capitalization of interest expense | (1,109) | (804) | (5,600) | (1,512) | |||||||
| Purchase of subsidiary shares | - | - | - | (2,690) | |||||||
| Proceeds from sale of long-term assets | 5,524 | 2,065 | 24,267 | 4,610 | |||||||
| Other | 23 | 277 | 1,103 | 279 | |||||||
| Cash used in investing activities | $ | (64,150) | $ | (40,829) | $ | (209,401) | $ | (161,617) | |||
| Decrease in cash and cash equivalents | $ | (18,675) | $ | (18,091) | $ | (20,546) | $ | (40,927) | |||
| Net cash and cash equivalents, beginning of period | (17,729) | 2,233 | (15,858) | 25,069 | |||||||
| Net cash and cash equivalents, end of period | $ | (36,404) | $ | (15,858) | $ | (36,404) | $ | (15,858) | |||
| Net cash and cash equivalents is comprised of: | |||||||||||
| Cash and cash equivalents | $ | - | $ | - | $ | - | $ | - | |||
| Bank indebtedness | (36,404) | (15,858) | (36,404) | (15,858) | |||||||
| Net cash and cash equivalents, end of period | $ | (36,404) | $ | (15,858) | $ | (36,404) | $ | (15,858) | |||
MAPLE LEAF FOODS INC.
Segmented Financial Information
(In thousands of Canadian dollars)
| Three months ended | Twelve months ended | |||||||||
| December 31, | December 31, | |||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||
| (Unaudited) | (Unaudited) | |||||||||
| Sales | ||||||||||
| Meat Products Group | $ | 781,813 | $ | 762,561 | $ | 3,039,460 | $ | 3,181,134 | ||
| Agribusiness Group | 63,499 | 56,167 | 259,644 | 199,498 | ||||||
| Bakery Products Group | 400,016 | 393,307 | 1,594,520 | 1,587,487 | ||||||
| $ | 1,245,328 | $ | 1,212,035 | $ | 4,893,624 | $ | 4,968,119 | |||
| Earnings before restructuring and other related costs and other income | ||||||||||
| Meat Products Group | $ | 27,472 | $ | 37,707 | $ | 95,987 | $ | 81,281 | ||
| Agribusiness Group | 14,744 | 14,896 | 81,895 | 50,505 | ||||||
| Bakery Products Group | 16,129 | 22,416 | 86,294 | 94,399 | ||||||
| Non-allocated costs | 2,721 | (5,563) | (1,206) | (753) | ||||||
| $ | 61,066 | $ | 69,456 | $ | 262,970 | $ | 225,432 | |||
| Capital expenditures | ||||||||||
| Meat Products Group | $ | 32,491 | $ | 17,057 | $ | 84,437 | $ | 66,423 | ||
| Agribusiness Group | 8,400 | 3,711 | 17,108 | 16,978 | ||||||
| Bakery Products Group | 27,697 | 21,599 | 127,626 | 78,903 | ||||||
| $ | 68,588 | $ | 42,367 | $ | 229,171 | $ | 162,304 | |||
| Depreciation and amortization | ||||||||||
| Meat Products Group | $ | 10,286 | $ | 17,022 | $ | 57,702 | $ | 73,177 | ||
| Agribusiness Group | 4,473 | 4,064 | 16,126 | 16,312 | ||||||
| Bakery Products Group | 13,609 | 13,334 | 52,162 | 53,722 | ||||||
| $ | 28,368 | $ | 34,420 | $ | 125,990 | $ | 143,211 | |||
| As at | As at | As at | ||||||||
| December 31, | December 31, | January 1, | ||||||||
| 2011 | 2010 | 2010 | ||||||||
| Total assets | ||||||||||
| Meat Products Group | $ | 1,465,576 | $ | 1,503,186 | $ | 1,700,058 | ||||
| Agribusiness Group | 223,013 | 249,594 | 257,503 | |||||||
| Bakery Products Group | 937,292 | 836,447 | 890,578 | |||||||
| Non-allocated assets | 314,578 | 245,683 | 226,900 | |||||||
| $ | 2,940,459 | $ | 2,834,910 | $ | 3,075,039 | |||||
| Goodwill | ||||||||||
| Meat Products Group | $ | 442,336 | $ | 442,336 | $ | 443,150 | ||||
| Agribusiness Group | 13,845 | 13,939 | 13,939 | |||||||
| Bakery Products Group | 297,558 | 296,636 | 297,970 | |||||||
| $ | 753,739 | $ | 752,911 | $ | 755,059 | |||||
Investor Contact: Nick Boland,
VP Investor Relations: 416-926-2005
Media Contact: 416-926-2020
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