The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from CNW Group

HIGH LINER FOODS REPORTS FOURTH QUARTER AND YEAR-END RESULTS FOR 2010

Tuesday, February 22, 2011

HIGH LINER FOODS REPORTS FOURTH QUARTER AND YEAR-END RESULTS FOR 201012:11 EST Tuesday, February 22, 2011 - Another year of strong earnings; quarterly dividend increased by 5.9% to $0.09 per share - LUNENBURG, NS, Feb. 22 /CNW/ - High Liner Foods Incorporated (TSX: HLF; HLF.A), a leading North American value-added frozen seafood company, today reported financial results for the thirteen-week period and fiscal year 2010 ended January 1, 2011. All amounts are reported in Canadian dollars.Financial and operational highlights for the fourth quarter include (all comparisons are relative to the fourth quarter of 2009, unless otherwise noted): << - Completed the acquisition of Viking Seafoods, Inc. in December 2010, which strengthens our position in the U.S. food service industry for broad line value-added seafood products; - Common Stock price increased by 35% during the quarter to $16.25 from $12.00 at the end of the third quarter, resulting in an increase in stock option expense of $2.5 million for the quarter; - Reported net income of $2.0 million, or diluted earnings per share ("EPS") of $0.13, compared with $3.8 million, or diluted EPS of $0.21, in the fourth quarter of 2009, with the decrease due to increased stock option expense and acquisition-related costs; - Excluding stock option expense, Adjusted EBITDA(1) increased by 17.6% to $13.4 million from $11.4 million; and - Excluding stock option expense, Adjusted Net Income(2) increased by 22.5% to $6.8 million, or diluted EPS of $0.44, from $5.5 million, or diluted EPS of $0.30, in the fourth quarter of 2009. >>Financial and operational highlights for the fiscal year include (all comparisons are relative to fiscal year 2009, unless otherwise noted): << - Common Stock price increased by 76% during the year to $16.25 from $9.25 at the end of fiscal year 2009, resulting in an increase in stock option expense of $4.0 million for the year; - Reported net income of $19.8 million, or diluted EPS of $1.22, up from $19.7 million, or diluted EPS of $1.07; - Excluding stock option expense, Adjusted EBITDA increased by 15.6% to $50.8 million from $43.9 million; - Excluding stock option expense, Adjusted Net Income increased by 22.9% to $25.6 million, or diluted EPS of $1.58, from $20.8 million, or diluted EPS of $1.13, for fiscal year 2009 - Sales volume increased by 1.6% during the year; and - Sales of $584.7 million, compared with $627.2 million, due primarily to a stronger Canadian dollar that reduced the sales of our U.S. subsidiary when reported in Canadian dollars. >>"We are very pleased by our continued strong profitability in 2010, with meaningful growth in Adjusted EBITDA and operating cash flow, despite lower reported sales largely driven by the stronger Canadian dollar, lower prices on commodity products, increased promotions on value-added products, and lower volume in Canadian operations as consumers reacted to higher selling prices," said Henry Demone, president and CEO, High Liner Foods Incorporated. "We benefited from the growth in sales volumes in the U.S. in both our food service and retail businesses, as well as from our cost-reduction initiatives to expand our margins. Moreover, we improved on our key performance measures while executing our strategic goals."Financial ResultsApproximately half of the Company's operations and assets, and more than 50% of its liabilities, are denominated in U.S. dollars. As such, foreign currency fluctuations affect the reported values of individual lines on the Company's balance sheet and income statement. << (In thousands except per share amounts, unless otherwise noted) Thirteen Thirteen Fifty-two Fifty-two weeks weeks weeks weeks ended ended ended ended Jan 1, Jan 2, Jan 1, Jan 2, 2011 2010 2011 2010 Sales in million pounds 42.9 42.8 176.6 173.9 Sales in domestic currency $139,799 $144,969 $575,742 $584,860 Foreign exchange impact $890 $3,858 $8,973 $42,326 Sales in Canadian dollars $140,689 $148,827 $584,715 $627,186 Adjusted EBITDA $10,571 $11,039 $46,460 $43,573 Net income $2,010 $3,798 $19,816 $19,747 Adjusted net income $3,610 $5,314 $21,366 $20,593 EPS (Diluted) $0.13 $0.21 $1.22 $1.07 Adjusted EPS (Diluted)(3) $0.23 $0.24 $1.32 $1.14 Average Shares Outstanding 15,374 18,350 16,186 18,396 Excluding Stock Option Expenses: Adjusted EBITDA $13,360 $11,365 $50,813 $43,938 Adjusted net income $6,785 $5,538 $25,624 $20,843 Adjusted EPS (Diluted) $0.44 $0.30 $1.58 $1.13 >>Sales for the fourth quarter decreased to $140.7 million from $148.8 million for the same period a year ago. The stronger Canadian dollar accounted for approximately $3.0 million of the decline, as sales generated by our U.S. operations were translated at a lower U.S. dollar value. Sales in domestic currency, which excludes the impact of currency translation, were $139.8 million compared with $145.0 million for fourth quarter of 2009. Total sales volume was 42.9 million pounds, an increase of 0.1 million pounds from the same period last year, which consists of an increase of 0.6 million pounds related to the acquisition of Viking Seafoods, Inc. and a 0.5-million pound decrease largely attributable to the effect of price increases, offset by increased sales volume in our U.S. food service operations and the launch of several new products.Adjusted EBITDA for the quarter declined by 4.2% to $10.6 million, or 7.5% of sales, from $11.0 million, or 7.4% of sales, for the fourth quarter last year. While approximately $0.4 million of the decline was due to the stronger Canadian dollar, a significant increase in stock option expense during the quarter offset improvements in operating profitability. Stock option expense increased to $2.8 million from $0.3 million during the same period last year due to the increase in High Liner's Common Stock price from $12.00 to $16.25 per share during the quarter.Our acquisition of the assets of Viking Seafoods, Inc. late in the fourth quarter contributed $1.7 million in sales and $0.1 million in EBITDA from December 13, 2010 to January 1, 2011.Net income for the quarter was $2.0 million, or diluted EPS of $0.13, compared with $3.8 million, or diluted EPS of $0.21, for the fourth quarter of 2009. In addition to stock option expenses, net income was impacted by non-recurring business acquisition costs and a higher effective tax rate. The higher taxes were due to a $1.0 million withholding tax on inter-company dividends related to the tax-efficient financing of the Viking acquisition, as well as changes in income tax rules regarding the tax deductibility of stock option expenses. Adjusted net income(2) was $3.6 million, compared with $5.3 million for the same period last year.Excluding stock option expense that resulted from the substantial stock price increase during the quarter, Adjusted EBITDA increased by 17.6% to $13.4 million from $11.4 million and adjusted net income increased by 22.5% to $6.8 million, or diluted EPS of $0.44, from $5.5 million, or diluted EPS of $0.30, from the same quarter last year. The retraction of 3.2 million non-voting shares during the second quarter of 2010 partly accounts for the increase in diluted EPS.DividendsToday, the Board of Directors of the Company resolved to pay a quarterly dividend of $0.09 per Common and Non-Voting Equity Share payable on March 15, 2011 to shareholders of record on March 1, 2011. This represents a 5.9% increase from the $0.085-per-share quarterly dividend paid on December 15, 2010, reflecting the Board's continued confidence in the Company's operations.Outlook"We are encouraged by our strong operating results and strategic initiatives in 2010, and believe that we are well positioned for further growth in 2011," added Mr. Demone. "We are making significant progress in integrating the Viking acquisition, and we expect Viking to substantially increase our market share for broad line value-added seafood products in the U.S. food service industry. We continue to develop innovative, new products, such as "Fire Roasters(TM)," which are flame-seared seafood products for the U.S. food service market launched in December and receiving excellent market response, and "High Liner(R) Pan-Sear Selects," whose Lime Chili Tilapia & Savoury Herb Cod offering was recently awarded Best New Product in the frozen fish category by Canadian Living. We expect to mitigate higher average raw material costs in 2011 with increased operating efficiencies and product pricing adjustments. Supported by a strong balance sheet and a continuing commitment to the sustainability of our industry, we are well positioned in the value-added frozen seafood market in North America."Financial StatementsFor convenience, this news release includes the Company's Fiscal Fourth Quarter Balance Sheets and Statements of Income, Statements of Comprehensive Income, Statements of Retained Earnings, Statements of Cash Flows and Segment Information. This news release is not in any way a substitute for reading High Liner's financial statements, including notes to the financial statements, and Management's Discussion and Analysis.The Company's audited consolidated financial statements for the year ended January 1, 2011 will be issued and filed on SEDAR on or before April 1, 2011. Management's Discussion and Analysis for the year ended January 1, 2011, including further discussion and analysis of fourth quarter events or items that affected results of operations, financial position, and cash flows, will also be issued and filed on or before April 1, 2011. Both documents will also be available in the Investor Information section of the Company's website at www.highlinerfoods.com.Icelandic StatusOn January 4, 2011, High Liner announced interest in acquiring all of the assets of Icelandic Group. Icelandic Group, a leading seafood supplier in Europe and one of the largest suppliers of value-added seafood to the U.S. food service market, was in private negotiations with a single buyer at the time.High Liner has been informed that Icelandic Group intends to initiate an open process to sell its plant operations in the United States and its manufacturing business in China, but not its other assets. High Liner continues to have an interest in the Icelandic Group assets that are expected to be for sale in an open process, and expects to receive further information on the process from Enterprise Investment Fund.High Liner does not intend to provide any additional updates on its interest in Icelandic Group, or the open sale process, until High Liner's involvement in the process concludes.Conference CallThe Company will host a conference call on Wednesday, February 23, at 10:30 a.m. ET (11:30 a.m. AT) to discuss its fourth quarter and full-year financial results. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately ten minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay by telephone until Wednesday, March 2, 2011 at midnight. To access the archived conference call, dial 1-800-642-1687 and enter the reservation number 37326260.A live audio webcast of the conference call will be available at www.highlinerfoods.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for one year.About High Liner Foods IncorporatedHigh Liner Foods Incorporated is a leading North American processor and marketer of prepared, value-added frozen seafood. High Liner's branded products are sold throughout the United States, Canada and Mexico under the High Liner(R), Fisher Boy(R), Mirabel(R) and Sea Cuisine(TM) labels, and are available in most grocery and club stores. The Company also sells its High Liner(R), FPI(R), Mirabel(R), and Viking(TM) food service products to restaurants and institutions, and is a major supplier of private label seafood products to North American food retailers and food service distributors. High Liner Foods is a publicly traded Canadian company, trading under the symbols HLF and HLF.A on the Toronto Stock Exchange.This document contains forward-looking statements. Forward-looking statements can generally be identified by the use of the conditional tense, the words "may", "should", "would", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective" or "continue" or the negative of these terms or variations of them or words and expressions of similar nature. Specific forward-looking statements in this document include, but are not limited to expectations with respect to, planned volume growth, expectations that Viking will substantially increase our market share for broad line value-added seafood products in the U.S. food service industry, higher average raw material costs in 2011 and our ability to mitigate with increased operating efficiencies and product pricing adjustments, anticipated financial performance, and our market position. These statements are based on a number of factors and assumptions including, but not limited to: availability, demand and prices of raw materials, energy and supplies; the condition of the Canadian and United States economies; product pricing; foreign exchange rates, especially the rate of exchange of the Canadian dollar to the U.S. dollar; our ability to attract and retain customers and our operating costs. The statements are not a guarantee of future performance. By their nature, forward-looking statements involve uncertainties and risks that the forecasts and targets will not be achieved. Readers are cautioned not to place undue reliance on forward-looking statements, as actual results may differ materially from those expressed in such forward-looking statements. We include in publicly available documents filed from time to time with securities commissions and The Toronto Stock Exchange, a discussion of the risk factors that can cause anticipated outcomes to differ from actual outcomes. Except as required under applicable securities legislation, we do not undertake to update forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, whether as a result of new information, future events or otherwise.The Company reports its financial results in accordance with Canadian generally accepted accounting principles ("GAAP"). We have included in this media release certain non-GAAP financial measures. These non-GAAP financial measures are Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Share.The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by Canadian GAAP and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with Canadian GAAP.For further information about the Company, please visit our website at www.highlinerfoods.com or send an e-mail to investor@highlinerfoods.com. << ------------------------------- (1) Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, excluding business acquisition and integration costs and other non-operating transactions, as disclosed in the consolidated statements of income. (2) Adjusted net income is net income excluding business acquisition and integration costs, non-operating items, and withholding tax related to the financing of the Viking acquisition. In addition, 2009 has been adjusted to normalize the effective income tax rate of its U.S. subsidiary as though it was taxable throughout the year. (3) Adjusted EPS is Adjusted net income, as defined, divided by the average diluted number of shares. HIGH LINER FOODS INCORPORATED As at January 1, 2011 (with comparative figures as at January 2, 2010) (Unaudited) CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars) January 1, January 2, 2011 2010 ------------------------------------------------------------------------- ASSETS Current: Cash and cash equivalents $ 806 1,953 Accounts receivable 50,538 59,553 Income tax receivable 701 1,288 Inventories 133,670 119,586 Prepaid expenses 1,890 2,024 Future income taxes 2,389 3,846 ------------------------------------------------------------------------- Total current assets 189,994 188,250 ------------------------------------------------------------------------- Property, plant and equipment 58,829 59,528 ------------------------------------------------------------------------- Other: Future income taxes - 349 Other receivables and sundry investments 295 243 Employee future benefits 3,065 7,391 Intangible assets 20,577 19,785 Goodwill 43,632 28,701 ------------------------------------------------------------------------- 67,569 56,469 ------------------------------------------------------------------------- 316,392 304,247 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current: Bank loans 42,423 22,786 Accounts payable and accrued liabilities 64,249 54,876 Income taxes payable 3,230 29 Current portion of long-term debt 4,426 4,582 Current portion of capital lease obligations 972 864 ------------------------------------------------------------------------- Total current liabilities 115,300 83,137 ------------------------------------------------------------------------- Long-term debt 44,119 50,848 ------------------------------------------------------------------------- Long-term capital lease obligations 3,045 2,700 ------------------------------------------------------------------------- Other long-term liabilities 673 1,254 ------------------------------------------------------------------------- Future income taxes 8,872 4,688 ------------------------------------------------------------------------- Employee future benefits 842 4,540 ------------------------------------------------------------------------- Shareholders' Equity: Common shares 79,563 108,804 Minority interests 50 - Contributed surplus 10,634 364 Retained earnings 72,682 64,690 Accumulated other comprehensive loss (19,388) (16,778) ------------------------------------------------------------------------- 143,541 157,080 ------------------------------------------------------------------------- 316,392 304,247 ------------------------------------------------------------------------- ------------------------------------------------------------------------- HIGH LINER FOODS INCORPORATED For the thirteen and fifty-two weeks ended January 1, 2011 (with comparative figures for the thirteen and fifty-two weeks ended January 2, 2010) (Unaudited) CONSOLIDATED STATEMENTS OF INCOME (in thousands of Canadian dollars, except per share amounts) For the For the For the For the thirteen thirteen fifty-two fifty-two weeks ended, weeks ended, weeks ended, weeks ended, January 1, January 2, January 1, January 2, 2011 2010 2011 2010 ----------------------------------------------- ------------------------- Sales $ 140,689 $ 148,827 $ 584,715 $ 627,186 Cost of sales 105,715 114,455 444,359 492,564 Distribution expenses 6,942 7,561 29,591 32,352 ----------------------------------------------- ------------------------- Gross profit 28,032 26,811 110,765 102,270 Foreign exchange gain 145 64 35 264 Selling, general and administrative expenses, excluding stock option expense (16,451) (17,109) (66,477) (65,206) Stock option expense (2,789) (326) (4,353) (365) Business acquisition, integration and other costs (986) (922) (875) (1,382) Amortization of intangibles assets (297) (436) (1,204) (1,499) Interest expense: Short-term (360) (353) (1,501) (1,680) Long-term (951) (932) (3,736) (3,765) Loss on asset disposals (64) (40) (60) (492) ----------------------------------------------- ------------------------- Income before income taxes 6,279 6,757 32,594 28,145 ----------------------------------------------- ------------------------- Income taxes Current (2,503) (206) (6,380) (2,548) Future (1,766) (2,753) (6,398) (5,850) ----------------------------------------------- ------------------------- Total income taxes (4,269) (2,959) (12,778) (8,398) ----------------------------------------------- ------------------------- Net income 2,010 3,798 19,816 19,747 ----------------------------------------------- ------------------------- ----------------------------------------------- ------------------------- PER SHARE INFORMATION Earnings per Common Share Basic 0.13 0.21 1.23 1.07 Diluted 0.13 0.21 1.22 1.07 Average shares outstanding for the period Basic 15,148,633 18,330,663 16,096,010 18,384,940 Diluted 15,373,635 18,350,378 16,244,728 18,396,067 ------------------------------------------------------------------------- ------------------------------------------------------------------------- HIGH LINER FOODS INCORPORATED For the thirteen and fifty-two weeks ended January 1, 2011 (with comparative figures for the thirteen and fifty-two weeks ended January 2, 2010) (Unaudited) CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in thousands of Canadian dollars) For the For the For the For the thirteen thirteen fifty-two fifty-two weeks ended weeks ended weeks ended weeks ended January 1, January 2, January 1, January 2, 2011 2010 2011 2010 ----------------------------------------------- ------------------------- Net income for the period 2,010 3,798 19,816 19,747 ----------------------------------------------- ------------------------- Other comprehensive income, net of future income taxes Unrealized foreign exchange losses on translation of self- sustaining foreign operations, net of $0.1 million income tax expense for the thirteen and fifty- two weeks in 2010 ($0.3 million income tax recovery for the thirteen and fifty- two weeks in 2009) (1,702) (1,846) (3,122) (6,586) ----------------------------------------------- ------------------------- Net loss on derivative financial instruments designated as cash flow hedges, net of $0.9 million and $0.4 million income tax recovery for the thirteen and fifty- two weeks in 2010 ($2.1 million and $0.3 million income tax recovery for the thirteen and fifty- two weeks in 2009) (903) (885) (2,251) (5,358) Net gain (loss) on derivative financial instruments designated as cash flow hedges in prior periods trans- ferred to net income in the current period, net of $1.2 million and $0.1 million income tax expense for the thirteen and fifty-two weeks in 2010 ($0.6 million income recovery and $0.7 million income tax expense for the thirteen and fifty-two weeks in 2009) 202 1,536 2,763 (1,140) ----------------------------------------------- ------------------------- Change in gains (losses) on derivatives designated as cash flow hedges (701) 651 512 (6,498) ----------------------------------------------- ------------------------- Other comprehensive loss (2,403) (1,195) (2,610) (13,084) ----------------------------------------------- ------------------------- Comprehensive (loss) income (393) 2,603 17,206 6,663 ----------------------------------------------- ------------------------- ----------------------------------------------- ------------------------- HIGH LINER FOODS INCORPORATED For the thirteen and fifty-two weeks ended January 1, 2011 (with comparative figures for the thirteen and fifty-two weeks ended January 2, 2010) (Unaudited) CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (in thousands of Canadian dollars) For the For the For the For the thirteen thirteen fifty-two fifty-two weeks ended weeks ended weeks ended weeks ended January 1, January 2, January 1, January 2, 2011 2010 2011 2010 ----------------------------------------------- ------------------------- Balance, beginning of period 78,424 62,267 64,690 49,897 Net income for the period 2,010 3,798 19,816 19,747 Voting common share dividends paid (1,128) (995) (4,379) (3,592) Non-voting common share dividends paid (160) (380) (859) (1,367) Shares cancelled (6,477) - (6,477) - Share (retraction) issuance expenses 13 - (109) 5 ----------------------------------------------- ------------------------- Balance, end of period 72,682 64,690 72,682 64,690 ----------------------------------------------- ------------------------- ----------------------------------------------- ------------------------- HIGH LINER FOODS INCORPORATED For the thirteen and fifty-two weeks ended January 1, 2011 (with comparative figures for the thirteen and fifty-two weeks ended January 2, 2010) (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars) For the For the For the For the thirteen thirteen fifty-two fifty-two weeks ended, weeks ended, weeks ended, weeks ended, January 1, January 2, January 1, January 2, 2011 2010 2011 2010 ----------------------------------------------- ------------------------- Cash provided by (used in) operations: Net income from operations for the period 2,010 3,798 19,816 19,747 Charges (credits) to income not involving cash from operations: Depreciation and amortization 2,127 2,268 8,357 9,048 Stock compensation expense 2,151 326 3,715 365 Loss on asset disposals 63 56 139 516 Payments of employee future benefits less than expense 84 68 638 77 Future income taxes 1,766 2,753 6,398 5,850 Unwound foreign exchange contract gains reclassed from Accumulated Other Comprehensive Loss - (451) (165) (7,245) Unrealized foreign exchange (gain) loss (17) (10) (161) 700 ----------------------------------------------- ------------------------- Cash flow from operations before changes in non-cash working capital: 8,184 8,808 38,737 29,058 Net change in non-cash working capital balances (5,835) (5,293) 11,631 (4,471) ----------------------------------------------- ------------------------- 2,349 3,515 50,368 24,587 ----------------------------------------------- ------------------------- Cash provided by (used in) financing activities: Increase (decrease) in current working capital facilities 28,802 3,500 20,674 (13,277) Proceeds from lease financing - 2,671 668 2,671 Repayment of long-term debt (1,120) - (4,511) - Repayment of capital lease obligations (228) (149) (806) (475) Minority interest - - 50 - Common dividends: Voting common share dividends paid (1,128) (995) (4,379) (3,592) Non-voting common share dividends paid (160) (380) (859) (1,367) Share (retraction)/ issuance expenses - - (150) 5 Repurchase of capital stock - - (25,480) (983) Stock options exercised - - 32 - ----------------------------------------------- ------------------------- 26,166 4,647 (14,761) (17,018) ----------------------------------------------- ------------------------- Cash provided by (used in) investing activities: Purchase of property, plant and equipment (net of investment tax credits) (1,637) (7,995) (4,413) (12,153) Net proceeds (expenditures) on disposal of assets (1) 13 34 25 Acquisition of business (31,802) - (31,802) - Decrease in other receivables (354) (110) (391) (110) ----------------------------------------------- ------------------------- (33,794) (8,092) (36,572) (12,238) ----------------------------------------------- ------------------------- Foreign exchange impact on cash and cash equivalents (56) (41) (182) (410) ----------------------------------------------- ------------------------- Change in cash and cash equivalents during the period (5,335) 29 (1,147) (5,079) Cash and cash equivalents, beginning of period 6,141 1,924 1,953 7,032 ----------------------------------------------- ------------------------- Cash and cash equivalents, end of period 806 1,953 806 1,953 ----------------------------------------------- ------------------------- ----------------------------------------------- ------------------------- HIGH LINER FOODS INCORPORATED For the thirteen and fifty-two weeks ended January 1, 2011 (with comparative figures for the thirteen and fifty-two weeks ended January 2, 2010) (Unaudited) SEGMENTED INFORMATION (in thousands of Canadian dollars) Segmented Sales: Thirteen weeks Fifty-two weeks ---------------------------------------------- ($000s) 2010 2009 2010 2009 ------------------------------------------------------------------------- Canada direct to Canada 69,870 75,137 283,906 297,671 Canada direct to other countries 4 8 450 38 ------------------------------------------------------------------------- 69,874 75,145 284,356 297,709 Canada intercompany to USA 1,794 2,080 5,247 7,136 ------------------------------------------------------------------------- Total Canada 71,668 77,225 289,603 304,845 ------------------------------------------------------------------------- USA direct to USA 69,931 73,043 297,213 326,438 USA direct to other countries 884 639 3,146 3,039 ------------------------------------------------------------------------- 70,815 73,682 300,359 329,477 USA intercompany to Canada 1,486 1,657 6,292 8,866 ------------------------------------------------------------------------- Total USA 72,301 75,339 306,651 338,343 ------------------------------------------------------------------------- Total sales 143,969 152,564 596,254 643,188 ------------------------------------------------------------------------- Less intercompany (3,280) (3,737) (11,539) (16,002) ------------------------------------------------------------------------- Consolidated external sales 140,689 148,827 584,715 627,186 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Segment Contributions to income before income tax from continuing operations: 2010 ----------------------------------------------- Thirteen weeks ----------------------------------------------- ($000s) Canada USA Unallocated Total ------------------------------------------------------------------------- Income (loss) before the following: 9,472 5,937 (4,838) 10,571 Depreciation and amortization (661) (1,099) (171) (1,931) Interest expense - - (1,311) (1,311) Other income/non- operating transactions (73) 8 (985) (1,050) ------------------------------------------------------------------------- Income (loss) before income tax 8,738 4,846 (7,305) 6,279 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital Expenditures Financed by operations 784 890 - 1,674 Less: investment tax credits - - - - ------------------------------------------------------------------------- Subtotal 784 890 - 1,674 Financed by capital leases 261 - - 261 ------------------------------------------------------------------------- Total capital expenditures 1,045 890 - 1,935 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2009 ----------------------------------------------- Thirteen weeks ----------------------------------------------- ($000s) Canada USA Unallocated Total ------------------------------------------------------------------------- Income (loss) before the following: 5,737 8,690 (3,388) 11,039 Depreciation and amortization (674) (1,199) (162) (2,035) Interest expense - - (1,285) (1,285) Other income/non- operating transactions - - (962) (962) ------------------------------------------------------------------------- Income (loss) before income tax 5,063 7,491 (5,797) 6,757 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital Expenditures Financed by operations 941 7,054 - 7,995 Less: investment tax credits - - - - ------------------------------------------------------------------------- Subtotal 941 7,054 - 7,995 Financed by capital leases 122 - - 122 ------------------------------------------------------------------------- Total capital expenditures 1,063 7,054 - 8,117 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2010 ----------------------------------------------- Fifty-two weeks ----------------------------------------------- ($000s) Canada USA Unallocated Total ------------------------------------------------------------------------- Income (loss) before the following: 33,620 24,951 (12,111) 46,460 Depreciation and amortization (2,622) (4,366) (706) (7,694) Interest expense (5,237) (5,237) Business acquisition costs - - (1,036) (1,036) Other income/non- operating transactions (144) 161 84 101 ------------------------------------------------------------------------- Income (loss) before income tax 30,854 20,746 (19,006) 32,594 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital Expenditures Financed by operations 2,112 2,338 - 4,450 Less: investment tax credits (37) - - (37) ------------------------------------------------------------------------- Subtotal 2,075 2,338 - 4,413 Financed by capital leases 875 - - 875 ------------------------------------------------------------------------- Total capital expenditures 2,950 2,338 - 5,288 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2009 ----------------------------------------------- Fifty-two weeks ----------------------------------------------- ($000s) Canada USA Unallocated Total ------------------------------------------------------------------------- Income (loss) before the following: 28,377 23,191 (7,995) 43,573 Depreciation and amortization (2,620) (4,869) (620) (8,109) Interest expense - - (5,445) (5,445) Business acquisition costs - - (460) (460) Other income/non- operating transactions - - (1,414) (1,414) ------------------------------------------------------------------------- Income (loss) before income tax 25,757 18,322 (15,934) 28,145 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital Expenditures Financed by operations 2,123 10,030 - 12,153 Less: investment tax credits - - - - ------------------------------------------------------------------------- Subtotal 2,123 10,030 - 12,153 Financed by capital leases 515 - - 515 ------------------------------------------------------------------------- Total capital expenditures 2,638 10,030 - 12,668 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Segmented Assets: January 1, January 2, ($000s) 2011 2010 ------------------------------------------------------------------------- Canada 125,284 139,727 USA 187,913 158,371 ------------------------------------------------------------------------- 313,197 298,098 Unallocated 3,195 6,149 ------------------------------------------------------------------------- 316,392 304,247 ------------------------------------------------------------------------- ------------------------------------------------------------------------- HIGH LINER FOODS INCORPORATED For the thirteen and fifty-two weeks ended January 1, 2011 (with comparative figures for the thirteen and fifty-two weeks ended January 2, 2010) (in thousands of Canadian Dollars) (Unaudited) The tables that follow reconcile adjusted EBITDA and adjusted net income to our reported financial results: ------------------------------------------------------- 2010 2009 ------------------------------------------------------- Diluted Earnings Diluted Earnings Per Share Per Share Based on: Based on: ------------------ ------------------ Year end Average Year end Average 2010 Shares Shares Shares Shares Out- Out- Out- Out- $000 standing standing $000 standing standing ------------------------------------------------------- Net income as reported $ 19,816 $ 19,747 Add back: Income taxes $ 12,778 $ 8,398 Interest expense $ 5,237 $ 5,445 Amortization of intangible assets $ 1,204 $ 1,499 Depreciation $ 6,490 $ 6,610 ---------- ---------- Standard EBITDA $ 45,525 $ 41,699 Add back (deduct): Business acquisition, integration, and other costs $ 875 $ 1,382 Loss on asset disposals $ 60 $ 492 ---------- ---------- Adjusted EBITDA $ 46,460 $ 43,573 Add back stock option expense $ 4,353 $ 365 ---------- ---------- Adjusted EBITDA, excluding stock options $ 50,813 $ 43,938 ---------- ---------- Net Income $ 19,816 $ 1.22 $ 1.29 $ 19,747 $ 1.07 $ 1.29 Add back (deduct): After-tax business acquisition, integration, and other costs $ 544 $ 0.03 $ 0.04 $ 1,142 $ 0.07 $ 0.07 Income tax adjustment on US income $ - $ - $ - $ (296) $ (0.02)$ (0.02) Intercompany dividend with- holding tax $ 1,006 $ 0.07 $ 0.07 $ - $ - $ - ------------------------------------------------------- $ 21,366 $ 1.32 $ 1.39 $ 20,593 $ 1.12 $ 1.34 Stock option expense, including income tax adjustment $ 4,258 $ 0.26 $ 0.28 $ 250 $ 0.01 $ 0.02 ------------------------------------------------------- Adjusted Net Income $ 25,624 $ 1.58 $ 1.67 $ 20,843 $ 1.13 $ 1.36 ------------------------------------------------------- Shares outstanding - as reported (000) 16,186 15,149 18,396 15,149 -------- -------- Dilutive effect of stock options out- standing at year end (000) 214 214 -------- -------- Year end 2010 dilutive shares (000) 15,363 15,363 -------- -------- -------- -------- ------------------------------------------------------- ------------------------------------------------------- Q4 2010 Q4 2009 ------------------------------------------------------- Diluted Earnings Diluted Earnings Per Share Per Share Based on: Based on: ------------------ ------------------ Year end Average Year end Average 2010 Shares Shares Shares Shares Out- Out- Out- Out- $000 standing standing $000 standing standing ------------------------------------------------------- Net income as reported $ 2,010 $ 3,798 Add back: Income taxes $ 4,269 $ 2,959 Interest expense $ 1,311 $ 1,285 Amortization of intangible assets $ 297 $ 436 Depreciation $ 1,634 $ 1,599 ---------- ---------- Standard EBITDA $ 9,521 $ 10,077 Add back (deduct): Business acquisition, integration, and other costs $ 986 $ 922 Loss on asset disposals $ 64 $ 40 ---------- ---------- Adjusted EBITDA $ 10,571 $ 11,039 Add back stock option expense $ 2,789 $ 326 ---------- ---------- Adjusted EBITDA, excluding stock options $ 13,360 $ 11,365 ---------- ---------- Net Income $ 2,010 $ 0.13 $ 0.13 $ 3,798 $ 0.21 $ 0.25 Add back (deduct): After-tax business acquisition, integration, and other costs $ 594 $ 0.04 $ 0.04 $ 576 $ 0.03 $ 0.04 Income tax adjustment on US income $ - $ - $ - $ 940 $ 0.05 $ 0.06 Intercompany dividend with- holding tax $ 1,006 $ 0.06 $ 0.07 $ - $ - $ - ------------------------------------------------------- $ 3,610 $ 0.23 $ 0.23 $ 5,314 $ 0.29 $ 0.35 Stock option expense, including income tax adjustment $ 3,175 $ 0.21 $ 0.21 $ 224 $ 0.01 $ 0.01 ------------------------------------------------------- Adjusted Net Income $ 6,785 $ 0.44 $ 0.44 $ 5,538 $ 0.30 $ 0.36 ------------------------------------------------------- Shares outstanding - as reported (000) 15,374 15,149 18,350 15,149 --------- --------- Dilutive effect of stock options out- standing at year end (000) 214 214 -------- -------- Year end 2010 dilutive shares (000) 15,363 15,363 -------- -------- -------- -------- ------------------------------------------------------- >>For further information: K.L. Nelson, Vice President Corporate Services, Chief Financial Officer & Secretary, High Liner Foods Incorporated, Tel: (902) 634-6200, investor@highlinerfoods.com; Salvador Diaz, Investor Relations, TMX Equicom, Tel: (416) 815-0700 ext.242, sdiaz@equicomgroup.com