Maple Leaf Foods Reports Results for Second Quarter 2012

TSX: MFI
www.mapleleaffoods.com

TORONTO, Aug. 1, 2012 /PRNewswire/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the second quarter ended June 30, 2012.

  • Adjusted Operating Earnings(1) for the second quarter were $71.9 million compared to $77.5 million last year
  • Net earnings for the second quarter were $32.5 million, compared to $24.6 million in the second quarter last year
  • Adjusted Earnings per Share(2) were $0.28 compared to $0.30 last year

"Our results rallied significantly from a weak first quarter due to improved profitability in both our fresh bakery and prepared meats businesses," said Michael H. McCain, President and CEO. "We've implemented selective price increases, grown our core branded businesses and our value creation initiatives are contributing to margin growth. While we made excellent progress in the quarter, we are heading into challenging commodity markets driven by drought conditions throughout North America that will fuel further food inflation.  Our business fundamentals are strong and we will take action to manage ongoing cost increases."

(1): Adjusted Operating Earnings, a non-IFRS measure, is defined as 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. 

(2): Adjusted Earnings per Share ("Adjusted EPS"), a non-IFRS measure, is 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, hedge ineffectiveness recognized in earnings, unrealized (gains) losses on commodity futures contracts, and the change in fair value of biological assets, net of tax and non-controlling interest.

Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release.

Financial Overview

Business Segment Review

Following is a summary of sales by business segment:

         
(Unaudited) Second Quarter Year-to-Date
($ thousands) 2012 2011 2012 2011
Meat Products Group $775,971 $762,212 $1,501,508 $1,480,453
Agribusiness Group 79,543 70,918 144,840 128,211
Protein Group $855,514 $833,130 $1,646,348 $1,608,664
Bakery Products Group 404,736 405,071 774,725 777,479
Sales $1,260,250 $1,238,201 $2,421,073 $2,386,143

The following table summarizes Adjusted Operating Earnings by business segment:

         
(Unaudited) Second Quarter Year-to-Date
($ thousands) 2012 2011 2012 2011
Meat Products Group $22,229 $21,102 $44,303 $47,749
Agribusiness Group 19,065 27,706 38,156 41,711
Protein Group $41,294 $48,808 $82,459 $89,460
Bakery Products Group 32,150 29,884 35,415 42,071
Non-allocated Costs in Adjusted 
Operating Earnings
(i) 
(1,559) (1,156) (5,470) (3,308)
Adjusted Operating Earnings $71,885 $77,536 $112,404 $128,223
(i) Non-allocated costs comprise expenses not separately identifiable to
business segment groups, and do not form part of the measures used
by the Company when assessing the segments' operating results.  

Protein Group

Sales for the Protein Group, which includes the Company's Meat Products Group and Agribusiness Group, increased 3% to $855.5 million in the second quarter of 2012, from $833.1 million for the prior year period. Adjusted Operating Earnings decreased 15% to $41.3 million compared to $48.8 million for the second quarter last year. Results for the Company's Meat Products Group and Agribusiness Group should be viewed in combination due to the higher number of intercompany transactions and correlated factors within these operations.

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 second quarter increased 2% to $776.0 million from $762.2 million for the second quarter last year. After adjusting for the impact of a weaker Canadian dollar, which increased the sales value of pork exports, sales increased 1%.  The increase in sales was primarily due price increases implemented earlier in the year and a higher value sales mix in the prepared meats business.

Adjusted Operating Earnings for the second quarter increased 5% to $22.2 million compared to $21.1 million last year, due to higher prepared meats and fresh poultry results, offset by compressed pork processing margins.

Earnings in the prepared meats business benefited from price increases implemented in 2011 and early 2012 to manage rising inflationary costs and a higher margin sales mix due to strong product innovation and sales execution. Also contributing to stronger earnings were benefits from the Company's network transformation initiatives, including the closure of two sub-scale facilities last year and continued simplification of the prepared meats product portfolio.

Earnings increased in fresh poultry operations, benefiting from improvements in industry poultry processor margins. The business also benefited from continued growth in higher value products under the Maple Leaf Prime Chicken brand.

Earnings declined in primary pork processing, reflecting unfavourable market conditions in North America and lower margins on export sales, primarily in the Japanese and Korean markets.

Agribusiness Group
Consists of Canadian hog production, animal by-product recycling operations including bio-diesel manufacturing and distribution.

Sales in the Agribusiness Group increased 12% to $79.5 million for the second quarter compared to $70.9 million last year, reflecting higher toll feed sales.

Adjusted Operating Earnings for the second quarter of 2012 decreased 31% to $19.1 million compared to $27.7 million last year. Hog production earnings declined due to higher feed costs and lower market prices for hogs.  Earnings in the by-products recycling operations were impacted by a combination of higher prices paid for raw materials and lower selling prices following declines in certain commodities during the quarter.

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 second quarter were $404.7 million, compared to $405.1 million last year. After adjusting for the closure of a bakery and related exit of unprofitable categories in the U.K. and currency translation on sales in the U.S. and U.K., sales increased 1%. The sales increase was mainly due to stronger volumes and selling prices in the North American frozen bakery operations. Volumes in the fresh bakery business were comparable to last year.

Adjusted Operating Earnings for the second quarter of 2012 increased 8% to $32.2 million compared to $29.9 million last year. While results in the fresh bakery business were consistent with last year, there was a significant improvement from the first quarter as a result of increased promotional and marketing activities and warm summer weather. However, an underlying decline in consumer demand continues to impact results. Included in results are $0.8 million in duplicative overhead costs related to the commissioning of a new fresh bakery in Hamilton, Ontario and which are expected to continue until early 2013. The Company expects the new bakery to be accretive to operating earnings commencing in 2013, with the closure of the third Toronto bakery and as volumes consolidate into the new Hamilton facility. Results from the fresh pasta business declined due to higher inflationary and operational costs, and increased advertising and promotional spending.

Frozen bakery earnings continued to improve due to higher pricing and volumes in the North American business, an improved sales mix in the U.K., and lower overhead costs resulting from the closure of the Walsall, U.K. bakery in the first quarter of 2012. These benefits were partially offset by higher inflationary costs in the business.

Margin Targets

The Company previously disclosed a 2012 Earnings Before Interest, Tax, Depreciation and Amortization ("EBITDA") margin target of 9.5%.  As a result of short-term weakness in primary pork industry margins and a challenging first quarter performance in the bakery business, the Company now expects EBITDA margin to be up to one percent lower than previously estimated.  EBITDA margin in the bakery business is expected to average 11.5% for the last three quarters of the year, however lower first quarter performance may reduce the previously disclosed full year EBITDA margin of 11.5% by up to 1.5%.  The protein business is expected to achieve a run rate of 8.5% by the end of the year however the full year margin may be up to 0.5% lower than the previously disclosed 2012 target of 8.5% primarily due to compressed primary pork processing margins in 2012.  The Company's 2015 EBITDA margin targets of 12.5% remain unchanged.

Capital Expenditure Estimate

The Company currently estimates its capital expenditures for the full year of 2012 will be approximately $350 million and this is a revision from the previously disclosed estimate of $435 million. It reflects lower base business capital spend to date and approximately $30 million timing differences in strategic capital spend. The timing differences related to strategic capital do not reflect significant changes in the estimates of construction timing.

Other Matters

On July 31, 2012, Maple Leaf Foods declared a dividend of $0.04 per share payable September 28, 2012 to shareholders of record at the close of business on September 7, 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 second 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 August 1, 2012 to review Maple Leaf Foods' second 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 9670637).

A webcast presentation of the second quarter financial results will also be available at http://www.media-server.com/m/p/ckjwbc92

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 tables reconcile 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 and six months 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 June 30, 2012
($ thousands) Meat
Products
Group
Agribusiness
Group
Bakery
Products
Group
Unallocated
costs
Consolidated
Net earnings         $32,526
Income taxes         12,922
Earnings from operations before income taxes         $45,448
Interest expense         18,413
Change in the fair value of non-designated interest rate swaps         220
Other (income) expense (2,259) (433) (1,349) 624 (3,417)
Restructuring and other related costs 8,571 - 1,205 - 9,776
Earnings from Operations 22,229 19,065 32,150 (3,004) 70,440
Decrease in fair value of biological assets - - - 3,233 3,233
Unrealized gains on commodity futures contracts - - - (1,788) (1,788)
Adjusted Operating Earnings $22,229 $19,065 $32,150 $(1,559) $71,885

 
(Unaudited) Three months ended June 30, 2011
($ thousands) Meat
Products
Group
Agribusiness
Group
Bakery
Products
Group
Unallocated
costs
Consolidated
Net earnings         $24,582
Income taxes         10,441
Earnings from operations before income taxes         35,023
Interest expense         17,074
Change in the fair value of non-designated interest rate swaps         5,623
Other (income) expense (25) 26 - 76 77
Restructuring and other related costs 4,048 - 12,547 - 16,595
Earnings from Operations 21,102 27,706 29,884 (4,300) 74,392
Decrease in fair value of biological assets - - - 9,828 9,828
Unrealized gains on commodity futures contracts - - - (6,684) (6,684)
Adjusted Operating Earnings $21,102 $27,706 $29,884 $(1,156) $77,536

               
(Unaudited) Six months ended June 30, 2012
($ thousands) Meat
Products
Group
Agribusiness
Group
Bakery
Products
Group
Unallocated
costs
Consolidated
Net earnings         $33,289
Income taxes         15,002
Earnings from operations before income taxes         48,291
Interest expense         36,056
Change in the fair value of non-designated interest rate swaps         (4,933)
Other (income) expense (2,167) (523) (1,371) 760 (3,301)
Restructuring and other related costs 23,043 - 7,089 - 30,132
Earnings from Operations 44,303 38,156 35,415 (11,629) 106,245
Decrease in fair value of biological assets - - - 1,101 1,101
Unrealized losses on commodity futures contracts - - - 5,058 5,058
Adjusted Operating Earnings $44,303 $38,156 $35,415 $(5,470) $112,404

   
(Unaudited) Six months ended June 30, 2011
($ thousands) Meat
Products
Group
Agribusiness
Group
Bakery
Products
Group
Unallocated
costs
Consolidated
Net earnings         $35,129
Income taxes         12,867
Earnings from operations before income taxes         47,996
Interest expense         35,025
Change in the fair value of non-designated interest rate swaps         958
Other (income) expense (29) (63) (78) 92 (78)
Restructuring and other related costs 9,330 - 32,597 793 42,720
Earnings from Operations 47,749 41,711 42,071 (4,910) 126,621
Decrease in fair value of biological assets - - - 4,321 4,321
Unrealized gains on commodity futures contracts - - - (2,719) (2,719)
Adjusted Operating Earnings $47,749 $41,711 $42,071 $(3,308) $128,223

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, hedge ineffectiveness recognized in earnings, 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.

   
(Unaudited) Three months
ended June 30,
Six months
ended June 30,
($ per share) 2012 2011 2012 2011
Basic earnings per share $0.21 $0.17 $0.22 $0.24
Restructuring and other related costs(i) 0.06 0.08 0.16 0.21
Change in the fair value of non-designated interest rate swaps(ii) 0.00 0.03 (0.03) 0.00
Change in the fair value of unrealized (gains) losses on commodity futures contracts(ii) (0.01) (0.03) 0.03 (0.01)
Change in the fair value of biological assets (ii) 0.02 0.05 0.01 0.02
Adjusted Earnings per Share (iii) $0.28 $0.30 $0.39 $0.47
   
(i)      Includes per share impact of restructuring and other related costs, net of tax and non-controlling interest.
(ii)      Includes per share impact of the change in fair value of non-designated interest rate swaps, hedge ineffectiveness
recognized in earnings, unrealized (gains) losses on commodity futures contracts and the change in fair value of
biological assets, net of tax.
(iii)      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.


Condensed Consolidated Interim Financial Statements
(Expressed in Canadian dollars)
(Unaudited)

MAPLE LEAF FOODS INC.

Three and six months ended June 30, 2012 and 2011

Consolidated Balance Sheets

              As at June 30,     As at June 30,     As at December 31,
(In thousands of Canadian dollars)     2012     2011     2011
              (Unaudited)     (Unaudited)      
ASSETS                    
Current assets                    
  Cash and cash equivalents    $  83,631    $   -     -
  Accounts receivable     108,014     102,499     133,504
  Notes receivable     124,323     173,537     98,545
  Inventories       319,722     286,704     293,231
  Biological assets     53,259     44,881     49,265
  Income and other taxes recoverable     45,831     41,130     43,789
  Prepaid expenses and other assets     18,946     21,669     24,688
  Assets held for sale     25,502     -     -
             $   779,228    $   670,420    $   643,022
  Property and equipment     1,090,473     1,050,192     1,067,246
  Investment property     12,305     11,436     11,232
  Employee benefits      119,002     169,126     133,942
  Other long-term assets      11,244     12,745     11,926
  Deferred tax asset     130,892     95,992     127,456
  Goodwill        754,150     751,535     753,739
  Intangible assets      203,821     174,983     191,896
  Total assets      $    3,101,115    $   2,936,429    $   2,940,459
                           
LIABILITIES AND EQUITY                  
Current liabilities                  
  Bank indebtedness    $   15,209   $   14,063    $   36,404
  Accounts payable and accruals     482,917     458,381     482,059
  Provisions        31,942     51,484     44,255
  Current portion of long-term debt     5,739     205,337     5,618
  Other current liabilities     17,543     71,605     20,409
             $   553,350    $   800,870    $   588,745
  Long-term debt       1,122,186     746,202     941,956
  Employee benefits      382,811     222,098     350,853
  Provisions        28,963     26,337     28,936
  Other long-term liabilities      77,459     96,379     88,153
  Deferred tax liability     8,749     24,890     11,703
  Total liabilities     $    2,173,518    $   1,916,776    $   2,010,346
Shareholders' equity                  
Share capital      $   902,810    $   902,810    $   902,810
Retained earnings (deficit)     (96,872)     17,182     (78,674)
Contributed surplus     75,066     67,550     64,327
Accumulated other comprehensive loss      (12,530)     (20,672)     (17,042)
Treasury stock       (6,347)     (10,078)     (6,347)
Total shareholders' equity     $   862,127    $   956,792    $   865,074
Non-controlling interest     65,470     62,861     65,039
Total equity      $   927,597    $   1,019,653    $   930,113
Total liabilities and equity    $    3,101,115    $   2,936,429    $   2,940,459

 

Consolidated Statements of Earnings

(In thousands of Canadian dollars, except share amounts)       Three months ended June 30,         Six months ended June 30,
(Unaudited)     2012     2011     2012     2011
                               
Sales     $  1,260,250    $   1,238,201   $  2,421,073    $   2,386,143
Cost of goods sold     1,060,504     1,038,693     2,050,386     2,005,381
Gross margin   $   199,746    $   199,508    $   370,687    $   380,762
Selling, general and administrative expenses     129,306     125,116     264,442     254,141
Earnings before the following:    $   70,440    $   74,392    $   106,245    $   126,621
Restructuring and other related costs      (9,776)     (16,595)     (30,132)     (42,720)
Change in fair value of non-designated interest rate swaps      (220)     (5,623)     4,933     (958)
Other income (expense)      3,417     (77)     3,301     78
Earnings before interest and income taxes    $   63,861    $   52,097    $   84,347    $   83,021
Interest expense      18,413     17,074     36,056     35,025
Earnings before income taxes    $  $ 45,448    $   35,023    $  $ 48,291   $   47,996
Income taxes     12,922     10,441     15,002     12,867
Net earnings     $   32,526   $   24,582    $   33,289   $   35,129
Attributed to:                        
Common shareholders    $   29,849    $   23,103    $   30,528    $   33,765
Non-controlling interest     2,677     1,479     2,761     1,364
           $   32,526    $   24,582    $   33,289   $   35,129
Earnings per share attributable to common shareholders                         
Basic earnings per share   $   0.21    $   0.17    $   0.22    $   0.24
Diluted earnings per share    $   0.21     0.16    $   0.21    $   0.24
Weighted average number of shares (millions)     139.5     139.2     139.5     139.2

 


Consolidated Statements of Comprehensive (Loss) Income

(In thousands of Canadian dollars)     Three months ended June 30,           Six months ended June 30,
(Unaudited)       2012     2011     2012     2011
                                 
Net earnings     $   32,526    $   24,582   $   33,289    $   35,129
Other comprehensive (loss) income                        
    Change in accumulated foreign currency translation adjustment     2,500     305     283     (906)
    Change in unrealized gains and losses on cash flow hedges     537     (2,854)     4,243     2,184
  Change in actuarial gains and losses     (30,511)     -     (38,165)     -
            $   (27,474)    $   (2,549)   $   (33,639)    $   1,278
Comprehensive (loss) income   $   5,052    $   22,033    $   (350)    $   36,407
Attributed to:                          
Common shareholders   $   2,345    $   20,529    $   (2,713)   $   35,678
Non-controlling interest     2,707     1,504     2,363     729

 


Consolidated Statements of Changes in Total Equity

                Attributable to Common Shareholders            
(In thousands of Canadian dollars)     Share
capital
    Retained
earnings
    Contributed
surplus
    Total
accumulated
other
comprehensive
loss
    Treasury
stock
    Non-
controlling
interest
    Total
equity
                                                     
Balance at                                             
  December 31, 2011   $    902,810   $   (78,674)   $   64,327   $   (17,042)   $    (6,347)   $   65,039   $    930,113
    Net earnings       -     30,528     -     -     -     2,761     33,289
      Other comprehensive (loss) income       -     (37,753)     -     4,512     -     (398)     (33,639)
      Dividends declared ($0.08 per share)     -     (10,973)     -     -     -     (1,932)     (12,905)
      Stock-based compensation expense       -     -     10,739     -     -     -     10,739
Balance at June 30, 2012     902,810     (96,872)     75,066     (12,530)      (6,347)     65,470     927,597
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                Attributable to Common Shareholders            
(In thousands of Canadian dollars)     Share
capital
    Retained
earnings
    Contributed
surplus
    Total
accumulated
other
comprehensive
loss
    Treasury
stock
    Non-
controlling
interest
    Total
equity
                                                     
Balance at                                            
  December 31, 2010    $   902,810    $   (5,267)    $   59,002    $   (22,585)    $   (10,078)    $   62,890    $   986,772
    Net earnings       -     33,765     -     -     -     1,364     35,129
      Other comprehensive income (loss)       -     -     -     1,913     -     (635)     1,278
      Dividends declared ($0.08 per share)     -     (11,316)     -     -     -     (758)     (12,074)
      Stock-based compensation expense       -     -     8,548     -     -     -     8,548
Balance at June 30, 2011    $   902,810    $   17,182    $   67,550    $   (20,672)    $   (10,078)    $   62,861    $   1,019,653

 

 


Consolidated Statements of Cash Flows


(In thousands of Canadian dollars)     Three months ended June 30,           Six months ended June 30,
(Unaudited)       2012     2011     2012     2011
                                 
CASH PROVIDED BY (USED IN):                        
                                 
Operating activities                        
  Net earnings      $   32,526   $   24,582    $   33,289   $   35,129
  Add (deduct) items not affecting cash:                        
    Change in fair value of biological assets     3,233     9,828     1,101     4,321
    Depreciation and amortization     33,180     32,398     64,569     65,266
    Stock-based compensation     5,303     4,271     10,739     8,548
    Deferred income taxes     3,637     2,129     3,863     3,269
    Income tax current     9,285     8,312     11,139     9,598
    Interest expense     18,413     17,074     36,056     35,025
    (Gain) loss on sale of property and equipment     (433)     142     (413)     118
    Gain on disposal of assets held for sale     (320)     -     (320)     -
      Change in fair value of non-designated
interest rate swaps
    220     5,623     (4,933)     958
      Change in fair value of derivative financial instruments     (326)     (6,295)     5,623     (1,922)
  (Increase) decrease in pension asset     (4,298)     (648)     (4,475)     1,808
  Net income taxes paid     (3,920)     (8,296)     (9,519)     (18,294)
  Interest paid       (18,585)     (20,484)     (35,378)     (23,848)
    Change in provision for restructuring and other related costs     1,141     7,415     6,584     28,067
  Other       (874)     387     (1,822)     (1,820)
  Change in non-cash operating working capital     27,299     (47,642)     (35,571)     (109,730)
Cash provided by operating activities    $   105,481    $   28,796    $   80,532    $   36,493
                                 
Financing activities                        
  Dividends paid      $   (5,393)   $   (5,722)    $  (10,973)   $   (11,316)
  Dividends paid to non-controlling interest     (661)     (152)     (1,169)     (402)
  Net increase in long-term debt     30,000     9,960     180,000     87,765
  Increase in financing costs     -     (3,986)     -     (6,124)
  Other       (321)     (750)     (783)     (749)
Cash provided by (used in) financing activities    $   23,625    $   (650)    $   167,075    $   69,174
                                 
Investing activities                        
  Additions to long term-assets    $   (63,633)   $   (57,920)    $   (119,439)   $   (108,255)
  Capitalization of interest expense     (1,307)     (1,960)     (2,521)     (3,337)
  Acquisition of business     -     -     (31,130)     -
  Proceeds from sale of long-term assets     2,203     2,238     4,749     7,675
  Proceeds from disposal of assets held for sale     5,557     -     5,557     -
  Other       3     (503)     3     45
Cash used in investing activities    $   (57,177)    $   (58,145)    $   (142,781)    $   (103,872)
                                 
Increase (decrease) in cash and cash equivalents  $   71,929     (29,999)    $   104,826   $   1,795
Net cash and cash equivalents, beginning of period     (3,507)     15,936     (36,404)     (15,858)
Net cash and cash equivalents, end of period    $   68,422    $   (14,063)    $   68,422    $   (14,063)
                                 
Net cash and cash equivalents is comprised of:                        
Cash and cash equivalents    $   83,631   $   -    $   83,631   $   -
Bank indebtedness     (15,209)     (14,063)     (15,209)     (14,063)
Net cash and cash equivalents, end of period    $   68,422    $   (14,063)    $   68,422    $   (14,063)


Segmented Financial Information


      Three months ended June 30,    Six months ended June 30,
        2012     2011     2012     2011
                           
Sales                          
  Meat Products Group   $ 775,971   $ 762,212   $ 1,501,508   $ 1,480,453
  Agribusiness Group     79,543     70,918     144,840     128,211
  Bakery Products Group     404,736     405,071     774,725     777,479
      $ 1,260,250   $ 1,238,201   $ 2,421,073   $ 2,386,143
                           
Earnings before restructuring and other related
costs and other income
                       
    Meat Products Group   $ 22,229   $ 21,102   $ 44,303   $ 47,749
    Agribusiness Group     19,065     27,706     38,156     41,711
    Bakery Products Group     32,150     29,884     35,415     42,071
    Non-allocated costs     (3,004)     (4,300)     (11,629)     (4,910)
      $ 70,440   $ 74,392   $ 106,245   $ 126,621
                           
Capital expenditures                          
  Meat Products Group   $ 46,159   $ 18,232   $ 85,131   $ 32,650
  Agribusiness Group     2,614     2,529     5,694     5,162
  Bakery Products Group     14,860     37,159     28,614     70,443
      $ 63,633   $ 57,920   $ 119,439   $ 108,255
                           
Depreciation and amortization                          
  Meat Products Group   $ 15,151   $ 15,814   $ 29,917   $ 31,632
  Agribusiness Group     3,983     3,908     7,926     7,848
  Bakery Products Group     14,046     12,676     26,726     25,786
        $ 33,180   $ 32,398   $ 64,569   $ 65,266 

 

        As at June 30,     As at June 30,     As at December 31,
        2012     2011     2011
                     
Total assets                  
  Meat Products Group   $ 1,548,254   $ 1,530,055   $ 1,465,576
  Agribusiness Group      222,849       250,125       223,013
  Bakery Products Group       991,870       903,669       937,292
  Non-allocated assets       338,142       252,580       314,578
      $ 3,101,115   $ 2,936,429   $ 2,940,459
                     
Goodwill                    
  Meat Products Group   $ 442,726   $ 442,336   $ 442,336
  Agribusiness Group     13,845     13,939     13,845
  Bakery Products Group     297,579       295,260       297,558
      $ 754,150   $ 751,535   $ 753,739

 

 

 

 

 

 

 

 

SOURCE Maple Leaf Foods Inc.



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