Maple Leaf Foods Reports Results for First Quarter 2011
TSX: MFI www.mapleleaffoods.com
TORONTO, April 28 /PRNewswire-FirstCall/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the first quarter ended March 31, 2011. First quarter highlights include:
- Adjusted Operating Earnings(1) increased 61% to $50.7 million - Value creation initiatives on track and contributing to margin growth - Net earnings in the quarter decreased 47% to $10.5 million, including $26.1 million in pre-tax restructuring costs - Adjusted Earnings per Share(1) increased to $0.18 from $0.07 last year
"Maple Leaf Foods delivered our eighth consecutive quarter of improved results, with a significant increase in profitability in our fresh and prepared meats businesses." said Michael H. McCain, President and CEO. "We are very pleased with the progress on both short and long-term initiatives. Our value creation plan is on track and contributed to earnings in the quarter. While the most significant challenge has been rising raw material costs, we are passing on price increases to protect our margins. Overall, this was another strong quarter of performance."
(1): Adjusted Operating Earnings measures are defined as earnings from operations before restructuring and other related costs, 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. 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 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. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release.
Financial Overview
Sales for the first quarter of 2011 decreased 4% to $1,147.9 million compared to $1,191.5 million last year, primarily due to business divestitures. Excluding the effect of divestitures, and the impact of a stronger Canadian dollar, sales increased by 4%.
Adjusted Operating Earnings increased to $50.7 million compared to $31.5 million last year primarily due to improved performance in the Protein Group. Adjusted Earnings per Share increased to $0.18, including $2.4 million ($0.02 per share) related to tax benefits associated with a prior acquisition. Adjusted Earnings per Share for the prior period were $0.07.
Net earnings decreased to $10.5 million or $0.08 basic earnings per share in the first quarter compared to net earnings of $19.9 million or $0.14 basic earnings per share last year. Net earnings in the quarter included $26.1 million of pre-tax costs related to restructuring activities (2010: $4.0 million).
Several items are excluded from the discussions of underlying earnings performance during the quarter. These include restructuring charges, mark-to-market adjustments on hedging contracts that are not designated in a hedging relationship and mark-to-market adjustments related to biological assets. Restructuring charges are excluded as they do not reflect the continuing earnings performance of the business. Mark to market adjustments do not reflect the economic effect of the hedging transactions and are excluded from earnings discussions until the underlying asset is sold or transferred. A full reconciliation is included in the section entitled Reconciliation of Non-IFRS Financial Measures in this news release.
Business Segment Review -----------------------
Following is a summary of sales by business segment:
------------------------------------------------------------------------- First Quarter (Unaudited) -------------------------- ($ thousands) 2011 2010 ------------------------------------------------------------------------- Meat Products Group $718,240 $768,180 Agribusiness Group 57,294 41,808 ------------------------------------------------------------------------- Protein Group $775,534 $809,988 Bakery Products Group 372,408 381,519 ------------------------------------------------------------------------- Sales $1,147,942 $1,191,507 ------------------------------------------------------------------------- -------------------------------------------------------------------------
The following table summarizes Adjusted Operating Earnings by business segment:
------------------------------------------------------------------------- First Quarter (Unaudited) -------------------------- ($ thousands) 2011 2010 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Meat Products Group $26,645 $11,551 Agribusiness Group 14,005 6,324 ------------------------------------------------------------------------- Protein Group $40,650 $17,875 Bakery Products Group 12,188 17,102 Non-allocated Costs in Adjusted Operating Earnings(i) (2,153) (3,521) ------------------------------------------------------------------------- Adjusted Operating Earnings $50,685 $31,456 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (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, chilled meal entrees and 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 (R), Schneiders (R) and many leading sub-brands.
Sales for the first quarter decreased 7% to $718.2 million from $768.2 million in the first quarter last year, largely due to the sale of the Company's Burlington, Ontario primary pork processing operation in November 2010. Excluding this divestiture and the impact of a stronger Canadian dollar that reduced the sales value of exports, sales increased by 4%. The business benefited from higher market prices in fresh pork and increased net pricing and improved sales mix in prepared meats, which were partly offset by lower volumes in prepared meats.
Adjusted Operating Earnings in the Meat Products Group for the first quarter increased 131% to $26.6 million compared to $11.6 million last year, driven by margin expansion in prepared meats and improved primary processing markets.
Prepared meats margins strengthened as price increases were successfully implemented to manage the effect of rising input costs. Higher prices continued to result in some volume declines, consistent with the experience of others in the food industry. As food inflation trends continue in 2011, pricing will continue to be implemented as required to offset higher costs. New product innovation, including the Natural Selections(TM) line of sliced meat products, contributed to an improved sales mix and higher margins. The Company is building on the success of this natural product offering, made with no artificial preservatives, with the launch of Schneiders(R) Country Naturals(TM) sliced meats across a broad range of prepared meat products.
Strong performance in primary pork processing operations was driven by improved market conditions in North America and operating efficiencies at the Brandon pork processing facility. Earnings from the fresh poultry operations declined, as higher corn prices drove up live bird prices and contracted industry processor margins.
The Company continues to implement its value creation plan to increase shareholder value over the near and long term. This includes implementing price increases, simplifying its product mix and increasing scale in its manufacturing network. During the quarter, the Company announced that it will close its Surrey, B.C. prepared meats facility and transfer production to other facilities in order to consolidate production and reduce costs.
Agribusiness Group ------------------
Consists of Canadian hog production and animal by-product recycling operations.
Sales in the Agribusiness Group for the first quarter increased 37% to $57.3 million from $41.8 million in the first quarter last year. Of this increase, approximately 25% was due to higher sales values, the remainder was related to higher volumes in the by-product recycling business.
Adjusted Operating Earnings in the Agribusiness Group in the first quarter increased to $14.0 million compared to $6.3 million last year, driven by stronger performance in both by-product recycling and hog production.
Hog prices have increased 18% since last year and outpaced the Company's net cost of grain, contributing to higher earnings. The contribution from by-products recycling operations also increased due to higher biodiesel sales volumes, eco-energy credits that were not received in the first quarter of 2010, and operational improvements. The benefit of higher market prices in the rendering business was mostly offset by higher raw material costs.
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(R), Tenderflake(R), Olivieri(R) and New York Bakery Co(TM), and many leading regional brands.
Sales in the Bakery Products Group for the first quarter decreased 2% to $372.4 million compared to $381.5 million last year, largely due to the sale of the Company's fresh sandwich product line in February, 2011. Excluding this and currency translation differences on sales in the U.S. and U.K., sales were consistent with prior year. While sales benefited from price increases implemented during 2010, this benefit was offset by volume declines. The North American frozen bakery business continued to experience weaker volumes due to changes implemented by certain retail customers earlier in 2010. Progress has been made in securing new business, which is expected to strengthen volumes in 2011. In the U.K., bagel volume increased significantly with the re-launch of the New York Bakery brand bagels, although overall volumes for the UK bakery were lower than last year.
Adjusted Operating Earnings in the Bakery Products Group for the first quarter decreased 29% to $12.2 million compared to $17.1 million last year, driven by the rapid rise in wheat prices and lower volumes. During the quarter the fresh bakery operation was significantly exposed to higher wheat prices with a lag in pricing to offset these inflationary pressures. Price increases were implemented at the end of the quarter and have begun to positively affect margins going forward. Also affecting earnings in the Bakery Products Group were lower volumes in the North American and U.K. frozen bakery businesses. In the U.K bakery, the margin improvement from the successful marketing campaign and product innovation in the bagel category was largely offset by the advertising and promotion expenses associated with the re-launch.
A significant element of the Company's value creation plan is the construction of the new fresh bakery in Hamilton, Ontario to benefit from scale efficiencies, reduce overhead costs and support future growth. This new bakery is on schedule to begin initial production in July 2011.
During the quarter the Company announced plans to close a fresh bakery facility located in Delta, B.C., in November 2011. Production will be consolidated at the Company's other bakeries in Langley, B.C. and Edmonton, Alberta. Concurrently, an investment of approximately $11.0 million will be made to expand the Edmonton bakery to support increased tortilla production, where the Company has a leading market position and brand.
In March 2011, the Company closed a sub-scale bakery in Laval, Quebec and transferred production to other bakeries where there was available capacity. Also in the first quarter of 2011, the Company entered into an agreement to sell a small bakery facility in Cumbria, U.K.
Other Matters -------------
On April 27, 2011 Maple Leaf Foods Inc. declared a dividend of $0.04 per share payable on June 30, 2011 to shareholders of record at the close of business on June 10, 2011. Unless indicated otherwise by the Company in writing at or before the time the dividend is paid, these dividends will not be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System".
It is currently anticipated that the full amount of the dividends to be paid in the first and second quarters of 2011 and a portion of the dividends to be paid in the third quarter will not be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System". A portion of the dividend in the third quarter and the dividend for the fourth quarter are expected to be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System".
An investor presentation related to the Company's fourth and full year financial results is available at www.mapleleaf.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 April 28, 2011 to review Maple Leaf Foods' first quarter financial results. To participate in the call, please dial 416-340-2219 or 877-240-9772. For those unable to participate, playback will be made available an hour after the event at 905-694-9451 / 800-408-3053 (Passcode 3612372).
A webcast presentation of the first quarter financial results will also be available at http://investor.mapleleaf.ca via a link:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=88490&eventID=3899007
The Company's full financial statements and related Management's Discussion and Analysis are available for download on the Company's website.
Forward-Looking Statements
This document contains, and the Company's oral and written public communications often contain, forward-looking statements that 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 statements in this document include, but are not limited to, statements with respect to improving business trends in 2011, expectations regarding actions to reduce costs, restore and/or promote volumes and/or increase prices, improve efficiencies, 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 statements. 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, United States, United Kingdom and Japanese economies; the rate of exchange of the Canadian dollar to the U.S. dollar, 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 protein business transformation 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 statements, 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 statements are discussed more fully in the Company's Annual Management's Discussion and Analysis for the period ended March 31, 2011 including the section entitled "Risk Factors" that is available on SEDAR at www.sedar.com. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking statements, 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. is a leading food processing company, headquartered in Toronto, Canada. The Company employs approximately 21,000 people at its operations across Canada and in the United States, the United Kingdom, and Asia. The Company had sales of $5.0 billion in 2010.
Reconciliation of Non-IFRS Financial Measures ---------------------------------------------
The Company uses the following non-IFRS measures: Adjusted Operating Earnings and Adjusted EPS. Management believes that these non-IFRS measures provide useful information to both Management and investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.
Adjusted Operating Earnings
The following table reconciles earnings from operations before restructuring and other related costs, other income (expense) and the impact of the change in fair value of non-designated interest rate swaps, unrealized gains/losses on commodity futures contracts and the change in fair value of biological assets to net earnings as reported under IFRS in the unaudited condensed consolidated interim statements of earnings for the three-month periods ended as indicated below. Management believes that this is the most appropriate basis on which to evaluate operating results, as restructuring and other related costs, other income (expense) and the change in fair value of non-designated interest rate swaps, unrealized gains/losses on commodity futures contracts and the change in fair value of biological assets are not representative of operational results during the period.
------------------------------------------------------------------------- (Unaudited) Three months ended March 31, 2011 ------------------------------------------------------------------------- ($ thousands)(1) Meat Agri- Bakery Non- Consol- Products business Products allocated idated Group Group Group Costs ------------------------------------------------------------------------- Net earnings $10,547 Income taxes 2,426 ------------------------------------------------------------------------- Earnings from operations before income taxes 12,973 Interest expense 17,951 Change in the fair value of non-designated interest rate swaps (4,665) Other income (4) (89) (78) 15 (156) Restructuring and other related costs 5,281 - 20,050 794 26,125 ------------------------------------------------------------------------- Earnings from Operations 26,645 14,005 12,188 (610) 52,228 (Increase) / decrease in fair value of biological assets - - - (5,507) (5,507) Unrealized (gains) / losses on commodity futures contracts - - - 3,964 3,964 ------------------------------------------------------------------------- Adjusted Operating Earnings $26,645 $14,005 $12,188 ($2,153) $50,685 ------------------------------------------------------------------------- (1) May not add due to rounding ------------------------------------------------------------------------- (Unaudited) Three months ended March 31, 2010 ------------------------------------------------------------------------- ($ thousands)(1) Meat Agri- Bakery Non- Consol- Products business Products allocated idated Group Group Group Costs ------------------------------------------------------------------------- Net earnings $19,892 Income taxes 7,511 ------------------------------------------------------------------------- Earnings from operations before income taxes 27,403 Interest expense 16,069 Change in the fair value of non-designated interest rate swaps - Other income (1,208) 955 (72) (4) (329) Restructuring and other related costs 2,469 (210) 1,704 - 3,963 ------------------------------------------------------------------------- Earnings from Operations 11,551 6,324 17,102 12,129 47,106 (Increase) / decrease in fair value of biological assets - - - (14,212) (14,212) Unrealized (gains) / losses on commodity futures contracts - - - (1,438) (1,438) ------------------------------------------------------------------------- Adjusted Operating Earnings $11,551 $6,324 $17,102 ($3,521) $31,456 ------------------------------------------------------------------------- (1) May not add due to rounding
Adjusted Earnings per Share
The following table reconciles Adjusted Earnings per Share to basic earnings per share as reported under IFRS in the unaudited condensed consolidated interim statements of earnings for the three-month periods ended as indicated below. Management believes this is the most appropriate basis on which to evaluate financial results as restructuring and other related costs and the changes in the fair value of non-designated interest rate swaps, unrealized gains/losses on commodity futures contracts and the change in fair value of biological assets net of tax and non-controlling interests are not representative of operational results.
------------------------------------------------------------------------- Three months ended (Unaudited) March 31, -------------------- ($ per share) 2011 2010 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings per share 0.08 0.14 Restructuring and other related costs(i) 0.13 0.02 Change in the fair value of non-designated interest rate swaps(ii) (0.02) - Unrealized gains/losses on commodity futures contracts 0.02 (0.01) Change in fair value of biological assets(ii) (0.03) (0.08) ------------------------------------------------------------------------- Adjusted Earnings per Share 0.18 0.07 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (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, unrealized gains/losses on commodity futures contracts and the change in fair value of biological assets, net of tax. Condensed Consolidated Interim Financial Statements (Expressed in Canadian dollars) (Unaudited) MAPLE LEAF FOODS INC. Three months ended March 31, 2011 and 2010 MAPLE LEAF FOODS INC. Consolidated Balance Sheets (In thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- As at As at As at As at March 31, March 31, December 31, January 1, (Unaudited) 2011 2010 2010 2010 ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 15,936 $ 72,334 $ - $ 29,316 Accounts receivable 105,687 335,318 84,117 375,143 Notes receivable 124,733 - 136,663 - Inventories 299,024 330,703 275,643 298,320 Biological assets 52,989 52,327 45,440 42,568 Income and other taxes recoverable 39,138 15,807 29,957 18,067 Prepaid expenses and other assets 33,436 18,978 14,766 15,328 ------------------------------------------------------------------------- $ 670,943 $ 825,467 $ 586,586 $ 778,742 Property and equipment 1,016,913 1,059,532 1,025,012 1,084,147 Investment property 11,523 6,468 6,832 6,646 Employee benefits 52,825 103,253 55,761 104,386 Other long-term assets 5,901 4,992 6,426 5,407 Deferred tax asset 103,840 96,034 110,286 91,768 Goodwill 751,484 752,838 752,911 755,059 Other intangible assets 169,752 143,783 164,178 137,239 ------------------------------------------------------------------------- Total assets $ 2,783,181 $ 2,992,367 $ 2,707,992 $ 2,963,394 ------------------------------------------------------------------------- LIABILITIES AND EQUITY Current liabilities Bank indebtedness $ - $ 6,167 $ 15,858 $ 4,247 Accounts payable and accruals 475,118 649,524 481,816 638,146 Provisions 44,860 19,681 35,062 20,612 Current portion of long-term debt 250,286 202,776 496,835 206,147 Other current liabilities 84,276 39,479 63,465 37,837 ------------------------------------------------------------------------- $ 854,540 $ 917,627 $ 1,093,036 $ 906,989 Long-term debt 691,278 831,946 389,078 834,557 Deferred tax liability 22,911 29,263 26,183 31,091 Employee benefits 105,370 103,905 105,849 101,379 Other long-term liabilities 100,845 111,715 98,417 98,918 ------------------------------------------------------------------------- Total liabilities $ 1,774,944 $ 1,994,456 $ 1,712,563 $ 1,972,934 ------------------------------------------------------------------------- Shareholders' Equity Share capital $ 902,810 $ 869,393 $ 902,810 $ 869,353 Retained earnings 41,271 45,904 36,201 32,733 Contributed surplus 63,279 61,486 59,002 57,486 Accumulated other comprehensive loss (50,909) (14,544) (55,396) (5,055) Treasury stock (10,078) (24,499) (10,078) (24,499) ------------------------------------------------------------------------- Total shareholders' equity $ 946,373 $ 937,740 $ 932,539 $ 930,018 Non-controlling interest 61,864 60,171 62,890 60,442 ------------------------------------------------------------------------- Total equity $ 1,008,237 $ 997,911 $ 995,429 $ 990,460 ------------------------------------------------------------------------- Total liabilities and equity $ 2,783,181 $ 2,992,367 $ 2,707,992 $ 2,963,394 ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Consolidated Statements of Earnings (In thousands of Canadian dollars, except share amounts) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, (Unaudited) 2011 2010 ------------------------------------------------------------------------- Sales $ 1,147,942 $ 1,191,507 Cost of goods sold 966,689 1,016,082 ------------------------------------------------------------------------- Gross margin $ 181,253 $ 175,425 Selling, general and administrative expenses 129,025 128,319 ------------------------------------------------------------------------- Earnings from operations before the following: $ 52,228 $ 47,106 Restructuring and other related costs (26,125) (3,963) Change in fair value of non-designated interest rate swaps 4,665 - Other income 156 329 ------------------------------------------------------------------------- Earnings from operations before interest and income taxes $ 30,924 $ 43,472 Interest expense 17,951 16,069 ------------------------------------------------------------------------- Earnings from operations before income taxes $ 12,973 $ 27,403 Income taxes 2,426 7,511 ------------------------------------------------------------------------- Net earnings $ 10,547 $ 19,892 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Attributed to: Common shareholders $ 10,662 $ 18,565 Non-controlling interest (115) 1,327 ------------------------------------------------------------------------- $ 10,547 $ 19,892 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share attributable to common shareholders Basic earnings per share $ 0.08 $ 0.14 Diluted earnings per share $ 0.07 $ 0.13 ------------------------------------------------------------------------- Weighted average number of shares (millions) 139.2 134.9 ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Consolidated Statements of Comprehensive Income (Loss) (In thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, (Unaudited) 2011 2010 ------------------------------------------------------------------------- Net earnings $ 10,547 $ 19,892 ------------------------------------------------------------------------- Other comprehensive income (loss) Change in accumulated foreign currency translation adjustment (1,211) (11,636) Change in unrealized loss on cash flow hedges 5,038 835 ------------------------------------------------------------------------- $ 3,827 $ (10,801) ------------------------------------------------------------------------- Comprehensive income $ 14,374 $9,091 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Attributed to: Common shareholders $ 15,149 $9,076 Non-controlling interest (775) 15 ------------------------------------------------------------------------- ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Consolidated Statements of Changes in Shareholders' Equity (In thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Attributable to common shareholders ------------------------------------------------- Total accum- ulated other Con- comp- Share Retained tributed rehensive Treasury (Unaudited) capital earnings surplus loss stock ------------------------------------------------------------------------- Balance at January 1, 2010 $869,353 $ 32,733 $ 57,486 $ (5,055) $(24,499) Net earnings - 18,565 - - - Other comprehensive income - - - (9,489) - Dividends declared ($0.04 per share) - (5,394) - - - Stock-based compensation expense - - 4,000 - - Share options exercised 40 - - - - ------------------------------------------------------------------------- Balance at March 31, 2010 $869,393 $ 45,904 $ 61,486 $(14,544) $(24,499) ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------- ------------------------------------------- Non-con- trolling Total (Unaudited) interest equity ------------------------------------------- Balance at January 1, 2010 $ 60,442 $990,460 Net earnings 1,327 19,892 Other comprehensive income (1,312) (10,801) Dividends declared ($0.04 per share) (286) (5,680) Stock-based compensation expense - 4,000 Share options exercised - 40 ------------------------------------------- Balance at March 31, 2010 $ 60,171 $997,911 ------------------------------------------- ------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Attributable to common shareholders ------------------------------------------------- Total accum- ulated other Con- comp- Share Retained tributed rehensive Treasury (Unaudited) capital earnings surplus loss stock ------------------------------------------------------------------------- Balance at January 1, 2011 $902,810 $ 36,201 $ 59,002 $(55,396) $(10,078) Net earnings - 10,662 - - - Other comprehensive income - - - 4,487 - Dividends declared ($0.04 per share) - (5,592) - - - Stock-based compensation expense - - 4,277 - - Share options exercised - - - - - ------------------------------------------------------------------------- Balance at March 31, 2011 $902,810 $ 41,271 $ 63,279 $(50,909) $(10,078) ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------- ------------------------------------------- Non-con- trolling Total (Unaudited) interest equity -------------------------------------------- Balance at January 1, 2011 $ 62,890 $ 995,429 Net earnings (115) 10,547 Other comprehensive income (660) 3,827 Dividends declared ($0.04 per share) (251) (5,843) Stock-based compensation expense - 4,277 Share options exercised - -------------------------------------------- Balance at March 31, 2011 $ 61,864 $1,008,237 -------------------------------------------- -------------------------------------------- MAPLE LEAF FOODS INC. Consolidated Statements of Cash Flows (In thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, (Unaudited) 2011 2010 ------------------------------------------------------------------------- CASH PROVIDED BY (USED IN): Operating activities Net earnings $ 10,547 $ 19,892 Add (deduct) items not affecting cash: Change in fair value of biological assets (5,507) (14,212) Depreciation and amortization 32,869 37,704 Stock-based compensation 4,277 4,000 Deferred income taxes 1,130 (6,814) Income tax current 1,286 13,848 Interest expense 17,951 16,069 Gain on sale of property and equipment (24) (1,243) Amortization of terminated interest rate swap 503 503 Change in fair value of non-designated interest rate swaps (4,666) - Change in fair value of derivative financial instruments 4,373 (2,972) Decrease in pension asset 2,457 2,862 Income taxes paid (9,998) (11,508) Interest paid (3,364) (2,959) Change in provision for restructuring and other related costs 20,652 182 Other (2,702) (2,953) Change in non-cash operating working capital (62,088) 12,081 ------------------------------------------------------------------------- Cash provided by operating activities $ 7,696 $ 64,480 ------------------------------------------------------------------------- Financing activities Dividends paid $ (5,592) $ (5,394) Dividends paid to non-controlling interest (251) (286) Net increase in long-term debt 77,805 9,475 Increase in share capital - 40 Increase in financing costs (2,138) - Other - (677) ------------------------------------------------------------------------- Cash provided by financing activities $ 69,824 $ 3,158 ------------------------------------------------------------------------- Investing activities Additions to property and equipment $ (50,334) $ (28,703) Capitalization of interest expense (1,377) (58) Proceeds from sale of property and equipment 5,437 2,172 Other 548 49 ------------------------------------------------------------------------- Cash used in investing activities $ (45,726) $ (26,540) ------------------------------------------------------------------------- Increase in cash and cash equivalents $ 31,794 $ 41,098 Net cash and cash equivalents, beginning of period (15,858) 25,069 ------------------------------------------------------------------------- Net cash and cash equivalents, end of period $ 15,936 $ 66,167 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net cash and cash equivalents is comprised of: Cash and cash equivalents $ 15,936 $ 72,334 Bank indebtedness - (6,167) ------------------------------------------------------------------------- Net cash and cash equivalents, end of period $ 15,936 $ 66,167 ------------------------------------------------------------------------- ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Segmented Financial Information (In thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, 2011 2010 ------------------------------------------------------------------------- Sales Meat Products Group $ 718,240 $ 768,180 Agribusiness Group 57,294 41,808 Bakery Products Group 372,408 381,519 ------------------------------------------------------------------------- $ 1,147,942 $ 1,191,507 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings from operations before restructuring and other related costs and other income Meat Products Group $ 26,645 $ 11,551 Agribusiness Group 14,005 6,324 Bakery Products Group 12,188 17,102 Non-allocated costs (610) 12,129 ------------------------------------------------------------------------- $ 52,228 $ 47,106 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital expenditures Meat Products Group $ 14,417 $ 13,626 Agribusiness Group 2,633 4,191 Bakery Products Group 33,284 10,886 ------------------------------------------------------------------------- $ 50,334 $ 28,703 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Depreciation and amortization Meat Products Group $ 15,819 $ 20,103 Agribusiness Group 3,940 4,111 Bakery Products Group 13,110 13,490 ------------------------------------------------------------------------- $ 32,869 $ 37,704 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- March 31, March 31, December 31, January 1, 2011 2010 2010 2010 ------------------------------------------------------------------------- Total assets Meat Products Group $ 1,476,676 $ 1,619,082 $ 1,405,566 $ 1,619,072 Agribusiness Group 213,616 240,797 211,858 226,844 Bakery Products Group 850,571 855,386 836,447 890,578 Non-allocated assets 242,318 276,382 254,121 226,900 ------------------------------------------------------------------------- $ 2,783,181 $ 2,992,367 $ 2,707,992 $ 2,963,394 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Goodwill Meat Products Group $ 442,336 $ 442,806 $ 442,336 $ 443,150 Agribusiness Group 13,939 13,939 13,939 13,939 Bakery Products Group 295,209 296,093 296,636 297,970 ------------------------------------------------------------------------- $ 751,484 $ 752,838 $ 752,911 $ 755,059 ------------------------------------------------------------------------- -------------------------------------------------------------------------
SOURCE Maple Leaf Foods Inc.
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