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Press release from CNW Group

Maple Leaf Foods Reports Results for Fourth Quarter and Fiscal Year 2010

Thursday, February 24, 2011

Maple Leaf Foods Reports Results for Fourth Quarter and Fiscal Year 201008:35 EST Thursday, February 24, 2011TORONTO, Feb. 24 /CNW/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the fourth quarter and the year ended December 31, 2010. Fourth quarter and full year highlights follow: << - Adjusted Operating Earnings increased 24% to $71.4 million in the fourth quarter and 13% to $222.0 million for the year - Fourth quarter adjusted Earnings per Share increased 42% to $0.27 and by 33% to $0.76 for the year - Net earnings in the quarter were $30.2 million compared to $21.9 million last year; net earnings for the full year, which included $71.3 million of non-cash pre-tax charges, were $25.8 million compared to $52.1 million last year >>Note: 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. 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, net of tax and non-controlling interest. Please refer to the section entitled Reconciliation of Non-GAAP Financial Measures at the end of this news release."Maple Leaf Foods delivered strong earnings growth in the fourth quarter, despite a sharp increase in raw material prices" said Michael H. McCain, President and CEO. "These results reflect the benefits of cost reductions and price increases intended to help us keep pace with global food inflation, and some early benefits from the initial execution of our strategic plan. We expect the progress we are making in reducing our cost structure, simplifying our product lines, and streamlining our operations will contribute to earnings throughout 2011."Financial OverviewSales for the fourth quarter of 2010 decreased 9% to $1,212.0 million compared to $1,324.9 million last year, primarily due to the sale of the Company's Burlington pork operation during the quarter and the effect of an additional week in the fourth quarter last year. For the full year ended December 31, 2010, sales were $4,968.1 million, compared to $5,221.6 million in 2009.Adjusted Operating Earnings increased to $71.4 million compared to $57.8 million last year due to improved performance in the Meat Products Group. Full year Adjusted Operating Earnings increased to $222.0 million compared to $196.1 million in 2009. Net earnings increased to $30.2 million or $0.22 basic earnings per share in the fourth quarter compared to net earnings of $21.9 million or $0.16 basic earnings per share last year. << Business Segment Review ----------------------- >>Following is a summary of sales by business segment: << ------------------------------------------------------------------------- Fourth Quarter Year-to-Date ------------------------------------------------ ($ thousands) 2010 2009 2010 2009 ------------------------------------------------------------------------- Meat Products Group $762,561 $842,175 $3,181,134 $3,310,393 Agribusiness Group 56,167 50,686 199,498 206,064 ------------------------------------------------------------------------- Protein Group $818,728 $892,861 $3,380,632 $3,516,457 Bakery Products Group 393,307 432,042 1,587,487 1,705,145 ------------------------------------------------------------------------- Sales $1,212,035 $1,324,903 $4,968,119 $5,221,602 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>Following is a summary of Adjusted Operating Earnings by business segment: << Fourth Quarter Year-to-Date ------------------------------------------------------------------------- ($ thousands) 2010 2009 2010 2009 ------------------------------------------------------------------------- Meat Products Group $39,513 $24,244 $89,701 $55,388 Agribusiness Group 14,731 14,505 50,834 48,023 ------------------------------------------------------------------------- Protein Group $54,244 $38,749 $140,535 $103,411 Bakery Products Group 22,296 21,896 93,206 102,155 Non-allocated Costs (i) (5,097) (2,805) (11,706) (9,455) ------------------------------------------------------------------------- Adjusted Operating Earnings $71,443 $57,840 $222,035 $196,111 ------------------------------------------------------------------------- (i) Non-allocated costs comprise costs related to systems conversion and consulting fees. Management believes that not allocating these costs provides a more comparable assessment of segmented 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 fourth quarter declined 10% to $762.6 million from $842.2 million compared to the same period last year. Excluding the impacts of an extra week in the fourth quarter of 2009, the divestiture of the Burlington pork processing facility and the exit of a non-core product line, sales increased by 4%. Higher market prices for fresh pork and increased net pricing in prepared meats were partly offset by lower volumes.Adjusted Operating Earnings in the Meat Products Group for the fourth quarter increased 63% to $39.5 million compared to $24.2 million last year, driven by strong performance in fresh pork processing operations due to improved pork pricing spreads. Strong pork results were partly offset by lower earnings in prepared meats. Prepared meats results declined due to lower volumes and higher input costs, although margins increased due to higher pricing. Earnings from the fresh poultry business were consistent with last year, as strong industry processor margins that continued through 2010 began to abate in the fourth quarter. For the year, Adjusted Operating Earnings in the Meat Products Group increased 62% to $89.7 million compared to $55.4 million last year.Maple Leaf is implementing a number of near-term initiatives to increase margins in the prepared meats business as part of the Company's value creation plan. These initiatives aim to reduce complexity and costs by, among other things, standardizing ingredient formulations, product sizes and specifications across all categories. Some early benefits were realized in 2010. The implementation of the value creation plan also involves a number of significant changes in the Company's prepared meats plant network. These changes will reduce costs through the closure of sub-scale plants and the consolidation of production volumes in other facilities. To this end, in November 2010, Maple Leaf announced the closure of its prepared meats facility in Berwick, Nova Scotia and, in early 2011, announced plans to close its prepared meats facility in Surrey, British Columbia. These closures are expected to result in lower costs and contribute to earnings later in 2011. The Company is also implementing price increases across its prepared meats business in response to rising meat costs. << Agribusiness Group ------------------ >>Consists of Canadian hog production and animal by-product recycling operations.Sales increased 11% to $56.2 million from $50.7 million in the fourth quarter last year due to higher sales values in the bio-diesel and core rendering businesses.Adjusted Operating Earnings in the Agribusiness Group in the fourth quarter were consistent with the prior year. Earnings in hog production were slightly behind last year as government support to compensate producers for prior year losses received in Q4 2009 was not repeated in 2010. Earnings from the by-products recycling operations increased slightly due to improved pricing and operating efficiencies.Adjusted Operating Earnings for the year increased 6% to $50.8 million from $48.0 million in 2009. << Bakery Products Group --------------------- >>Includes fresh and frozen bakery products, including breads, rolls, bagels, specialty and artisan breads, sweet goods, prepared sandwiches, 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(R), and many leading regional brands.Sales in the fourth quarter declined 9% to $393.3 million from $432.0 million in the prior year. Excluding the impact of the extra week in 2009, sales declined by 2% as lower volumes and foreign exchange translation were partly offset by improved product mix.Adjusted Operating Earnings in the Bakery Products Group for the fourth quarter were consistent with last year. Adjusted Operating Earnings for the year decreased to $93.2 million compared to $102.2 million in 2009.Adjusted Operating Earnings in the fresh bakery business increased in the fourth quarter due to lower commodity costs and the favourable impact of a stronger Canadian dollar on wheat and ingredient purchases. A significant rise in wheat prices that began in the fourth quarter has continued in 2011, and as a result the business will be implementing price increases late in the first quarter. Performance in the North American frozen bakery operations was lower than 2009, although volume began to strengthen towards the end of the year. A number of initiatives are underway to improve performance. In early 2011, the Company announced it will close a high cost bakery in Laval, Quebec and transfer production to its other bakeries where there is available capacity. Results in the U.K. bakery operations were consistent with last year. Management is proceeding with initiatives to reduce costs and consolidate volumes into fewer bakeries and in the first quarter of 2011 announced plans to close a bakery facility in Cumbria, U.K. Also, in the first quarter of 2011, a significant promotion of the Company's bagel brand in the U.K. was launched to support market growth in the bagel category.Construction of the Company's bakery facility in Hamilton, Ontario commenced in August 2010. The project is on target to begin initial production of bakery products in July 2011.On February 18, 2011, the Company completed the sale of its fresh sandwich business for $8.0 million, subject to post closing adjustments. << Other Matters ------------- >>On February 24, 2011 Maple Leaf Foods Inc. declared a dividend of $0.04 per share payable on March 31, 2011 to shareholders of record at the close of business on March 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 February 24, 2011 to review Maple Leaf Foods' fourth and full year 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 416-695-5800 / 800-408-3053 (Passcode 1362310).A webcast presentation of the fourth quarter financial results will also be available at http://investor.mapleleaf.ca via a link:http://investor.mapleleaf.com/phoenix.zhtml?c=88490&p=irol-EventDetails&EventId=3753605The 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, expectations, anticipations, estimates and intentions. Specific statements include, but are not limited to, statements with respect to expectations concerning improving trends in operational results and expectations regarding actions to reduce costs, improved efficiencies, restore volumes and/or increase prices. 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, expectations concerning 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 Japanese yen; expectations regarding actions to reduce costs, restore volumes and/or increase prices; 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 that would not be covered by insurance; no unexpected actions of domestic and foreign governments and the general assumption that none of the risks identified under "Risk Factors" in the Company's Annual Management's Discussion and Analysis for the year ended December 31, 2010 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 year ended December 31, 2010 including the section entitled "Risk Factors" that will be 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 $5.0 billion in 2010. << Reconciliation of Non-GAAP Financial Measures --------------------------- >>The Company uses the following non-GAAP measures: Adjusted Operating Earnings and Adjusted EPS. Management believes that these non-GAAP measures provide useful information to both management and investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by Canadian GAAP and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with Canadian GAAP.Adjusted Operating EarningsThe following table reconciles earnings from operations before restructuring and other related costs, other income (expense) and the impact of the change in fair value of non-designated interest rate swaps to net earnings as reported under Canadian GAAP in the unaudited interim period consolidated statements of earnings for the three-month periods and the audited full-year periods ended as indicated below. Management believes that this is the most appropriate basis on which to evaluate operating results, as restructuring and other related costs, other income (expense) and the change in fair value of non-designated interest rate swaps are not representative of operational results. << ------------------------------------------------------------------------- ($ thousands) Three months ended December 31, 2010 ------------------------------------------------------------------------- Meat Agri- Bakery Non- Consol- Products business Products allocated idated Group Group Group Costs ------------------------------------------------------------------------- Net earnings $30,179 ------------------------------------------------------------------------- Non-controlling interest 1,364 ------------------------------------------------------------------------- Income tax 13,395 ------------------------------------------------------------------------- Earnings from operations before income taxes 44,938 ------------------------------------------------------------------------- Interest expense 16,889 ------------------------------------------------------------------------- Change in the fair value of non-designated interest rate swaps (10,408) ------------------------------------------------------------------------- Earnings from operations before income taxes, interest expense and the change in fair value of non-designated interest rate swaps 21,814 14,919 19,632 (4,946) 51,419 ------------------------------------------------------------------------- Restructuring and other related costs 17,551 - 2,527 (376) 19,702 ------------------------------------------------------------------------- Other expense (income) 148 (188) 137 225 322 ------------------------------------------------------------------------- Adjusted Operating Earnings $39,513 $14,731 $22,296 ($5,097) $71,443 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ($ thousands) Three months ended December 31, 2009 ------------------------------------------------------------------------- Meat Agri- Bakery Non- Consol- Products business Products allocated idated Group Group Group Costs ------------------------------------------------------------------------- Net earnings $21,920 ------------------------------------------------------------------------- Non-controlling interest 1,499 ------------------------------------------------------------------------- Income tax 11,051 ------------------------------------------------------------------------- Earnings from operations before income taxes 34,470 ------------------------------------------------------------------------- Interest expense 19,372 ------------------------------------------------------------------------- Change in the fair value of non-designated interest rate swaps - ------------------------------------------------------------------------- Earnings from operations before income taxes, interest expense and the change in fair value of non-designated interest rate swaps 23,847 14,714 18,269 (2,988) 53,842 ------------------------------------------------------------------------- Restructuring and other related costs 697 (45) 3,637 103 4,392 ------------------------------------------------------------------------- Other expense (income) (300) (164) (10) 80 (394) ------------------------------------------------------------------------- Adjusted Operating Earnings $24,244 $14,505 $21,896 ($2,805) $57,840 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ($ thousands) Year ended December 31, 2010 ------------------------------------------------------------------------- Meat Agri- Bakery Non- Consol- Products business Products allocated idated Group Group Group Costs ------------------------------------------------------------------------- Net earnings $25,822 ------------------------------------------------------------------------- Non-controlling interest 6,193 ------------------------------------------------------------------------- Income tax 17,766 ------------------------------------------------------------------------- Earnings from operations before income taxes 49,781 ------------------------------------------------------------------------- Interest expense 66,386 ------------------------------------------------------------------------- Change in the fair value of non-designated interest rate swaps 24,922 ------------------------------------------------------------------------- Earnings from operations before income taxes, interest expense and the change in fair value of non-designated interest rate swaps 26,692 50,158 77,715 (13,476) 141,089 ------------------------------------------------------------------------- Restructuring and other related costs 64,001 (22) 15,548 1,581 81,108 ------------------------------------------------------------------------- Other expense (income) (992) 698 (57) 189 (162) ------------------------------------------------------------------------- Adjusted Operating Earnings $89,701 $50,834 $93,206 ($11,706) $222,035 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ($ thousands) Year ended December 31, 2009 ------------------------------------------------------------------------- Meat Agri- Bakery Non- Consol- Products business Products allocated idated Group Group Group Costs ------------------------------------------------------------------------- Net earnings $52,147 ------------------------------------------------------------------------- Non-controlling interest 7,902 ------------------------------------------------------------------------- Income tax 27,296 ------------------------------------------------------------------------- Earnings from operations before income taxes 87,345 ------------------------------------------------------------------------- Interest expense 81,234 ------------------------------------------------------------------------- Change in the fair value of non-designated interest rate swaps - ------------------------------------------------------------------------- Earnings from operations before income taxes, interest expense and the change in fair value of non-designated interest rate swaps 33,159 46,891 99,399 (10,870) 168,579 ------------------------------------------------------------------------- Restructuring and other related costs 22,298 2,026 4,908 1,913 31,145 ------------------------------------------------------------------------- Other expense (income) (69) (894) (2,152) (498) (3,613) ------------------------------------------------------------------------- Adjusted Operating Earnings $55,387 $48,023 $102,155 ($9,455) $196,111 ------------------------------------------------------------------------- >>Adjusted Earnings per ShareThe following table reconciles Adjusted Earnings per Share to basic earnings per share as reported under Canadian GAAP in the consolidated statements of earnings for the unaudited interim period for the three-month periods and the audited full-year periods ended as indicated below. Management believes this is the most appropriate basis on which to evaluate financial results as restructuring and other related costs and the change in the fair value of non-designated interest rate swaps are not representative of operational results. << ------------------------------------------------------------------------- ($ per share) Three months ended Year ended December 31, December 31, ------------------------------------------------------------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- Basic Earnings per Share $0.22 $ 0.16 $0.19 $ 0.40 ------------------------------------------------------------------------- Restructuring and other related costs(i) 0.11 0.02 0.45 0.17 ------------------------------------------------------------------------- Change in the fair value of non-designated interest rate swaps(ii) (0.05) - 0.12 - ------------------------------------------------------------------------- Adjusted Earnings per Share (iii) $0.27 $ 0.19 $0.76 $ 0.57 ------------------------------------------------------------------------- (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, net of tax. Management believes that it is appropriate to remove the impacts of these fair value adjustments when discussing the underlying operations of the business, as it provides shareholders with a more accurate representation of the underlying results of the business. (iii) Does not add due to rounding. >> << Consolidated Financial Statements (Expressed in Canadian dollars) MAPLE LEAF FOODS INC. Three month and Full year ended December 31, 2010 and 2009 MAPLE LEAF FOODS INC. Consolidated Balance Sheets (In thousands of Canadian dollars) ------------------------------------------------------------------------- As at December 31, 2010 2009 ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ - $ 29,316 Accounts receivable 84,117 189,221 Notes receivable 136,663 - Inventories 319,263 331,781 Income and other taxes recoverable 29,957 18,067 Future tax asset 6,229 4,301 Prepaid expenses and other assets 14,766 15,328 Assets held for sale - 29,224 ------------------------------------------------------------------------ $ 590,995 $ 617,238 Property and equipment 1,037,428 1,059,694 Other long-term assets 333,833 328,063 Future tax asset 20,737 22,116 Goodwill 850,382 857,278 Other intangible assets 163,420 137,239 Assets held for sale - 35,836 ------------------------------------------------------------------------- $ 2,996,795 $ 3,057,464 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank indebtedness $ 15,858 $ 4,247 Accounts payable and accrued charges 521,746 477,071 Current portion of long-term debt 496,835 206,147 Other current liabilities 63,465 37,837 Liabilities held for sale - 12,111 ------------------------------------------------------------------------ $ 1,097,904 $ 737,413 Long-term debt 389,078 834,557 Future tax liability 15,289 27,851 Other long-term liabilities 192,312 187,523 Non-controlling interest 84,835 81,070 Shareholders' equity 1,217,377 1,189,050 ------------------------------------------------------------------------- $ 2,996,795 $ 3,057,464 ------------------------------------------------------------------------- ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Consolidated Statements of Earnings (In thousands of Canadian dollars, except share amounts) ------------------------------------------------------------------------- Three months ended Year ended December 31, December 31, 2010 2009 2010 2009 ------------------------------------------------------------------------- (Unaudited)(Unaudited) Sales $1,212,035 $1,324,903 $4,968,119 $5,221,602 Cost of goods sold 1,004,580 1,118,967 4,228,928 4,487,378 ------------------------------------------------------------------------- Gross margin $ 207,455 $ 205,936 $ 739,191 $ 734,224 Selling, general and administrative expenses 136,012 148,096 517,156 538,113 ------------------------------------------------------------------------- Earnings from operations before the following: $ 71,443 $ 57,840 $ 222,035 $ 196,111 Restructuring and other related costs (19,702) (4,392) (81,108) (31,145) Change in fair value of non-designated interest rate swaps 10,408 - (24,922) - Other income (322) 394 162 3,613 ------------------------------------------------------------------------- Earnings from operations before interest and income taxes $ 61,827 $ 53,842 $ 116,167 $ 168,579 Interest expense 16,889 19,372 66,386 81,234 ------------------------------------------------------------------------- Earnings from operations before income taxes $ 44,938 $ 34,470 $ 49,781 $ 87,345 Income taxes 13,395 11,051 17,766 27,296 ------------------------------------------------------------------------- Earnings from operations before non-controlling interest $ 31,543 $ 23,419 $ 32,015 $ 60,049 Non-controlling interest 1,364 1,499 6,193 7,902 ------------------------------------------------------------------------- Net earnings $ 30,179 $ 21,920 $ 25,822 $ 52,147 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings per share $ 0.22 $ 0.16 $ 0.19 $ 0.40 Diluted earnings per share $ 0.21 $ 0.16 $ 0.19 $ 0.39 ------------------------------------------------------------------------- Weighted average number of shares (millions) 136.6 134.4 135.6 129.8 ------------------------------------------------------------------------- ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Consolidated Statements of Comprehensive Income (Loss) (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Year ended December 31, December 31, 2010 2009 2010 2009 ------------------------------------------------------------------------- (Unaudited) (Unaudited) Net earnings $ 30,179 $ 21,920 $ 25,822 $ 52,147 Other comprehensive loss Change in accumulated foreign currency translation adjustment (10,292) (7,815) (20,310) (15,644) Change in unrealized loss on cash flow hedges (7,291) (1,303) (4,026) 12,871 ------------------------------------------------------------------------- $ (17,583) $ (9,118) $ (24,336) $ (2,773) ------------------------------------------------------------------------- Comprehensive income $ 12,596 $ 12,802 $ 1,486 $ 49,374 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Retained Earnings (In thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Years ended December 31, 2010 2009 ------------------------------------------------------------------------- Retained earnings, beginning of year $ 344,839 $ 314,649 Net earnings for the year 25,822 52,147 Adoption of new accounting standard - (207) Dividends declared ($0.16 per share; 2009: $0.16 per share) (21,677) (20,913) Premium on shares issued from Restricted Share Unit Trust (2,665) (837) ------------------------------------------------------------------------- Retained earnings, end of year $ 346,319 $ 344,839 ------------------------------------------------------------------------- ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Consolidated Statements of Cash Flows (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Year ended December 31, December 31, 2010 2009 2010 2009 ------------------------------------------------------------------------- (Unaudited) (Unaudited) CASH PROVIDED BY (USED IN): Operating activities Net earnings $ 30,179 $ 21,920 $ 25,822 $ 52,147 Add (deduct) items not affecting cash: Depreciation and amortization 33,631 35,574 141,785 149,489 Stock-based compensation 4,404 4,736 17,725 18,400 Non-controlling interest 1,364 1,499 6,193 7,902 Future income taxes 8,069 4,995 (12,264) (7,390) Loss (gain) on sale of property and equipment 798 660 (217) 1,137 Gain on sale of investments - - - (501) Amortization of terminated interest rate swaps 502 503 2,010 2,106 Change in fair value of non-designated interest rate swaps (10,408) - 24,922 - Change in fair value of derivative financial instruments 192 (1,103) 1,372 (13,373) Change in other long-term receivables - 90 - 90 Decrease (increase) in net pension asset (2,370) (157) (1,077) 962 Change in provision for restructuring and other related costs 12,920 (804) 60,823 15,046 Other (1,908) 1,342 (2,729) (7,828) Change in non-cash operating working capital (15,429) 11,253 19,303 (128,981) ------------------------------------------------------------------------- Cash provided by operating activities $ 61,944 $ 80,508 $ 283,668 $ 89,206 ------------------------------------------------------------------------- Financing activities Dividends paid $ (5,434) $ (5,409) $ (21,677) $ (20,913) Dividends paid to non- controlling interest (149) (156) (747) (672) Increase (decrease) in long-term debt (60,385) (96,918) (168,764) (262,795) Proceeds on issuance of share capital 28,013 1,480 31,287 1,480 Purchase of treasury stock - - (496) (3,190) Increase in deferred financing costs (899) - (2,656) - Other (1,156) 304 (1,437) 3,110 ------------------------------------------------------------------------- Cash used in financing activities $ (40,010) $ (100,699) $ (164,490) $ (282,980) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Investing activities Additions to property and equipment $ (42,367) $ (39,501) $ (162,304) $ (162,893) Proceeds from disposal of property and equipment 2,065 145 4,610 23,717 Proceeds on sale of investments 140 - 140 1,540 Purchase of Canada Bread shares - - (2,690) - Other 137 183 139 (145) ------------------------------------------------------------------------- Cash used in investing activities $ (40,025) $ (39,173) $ (160,105) $ (137,781) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Decrease in cash and cash equivalents $ (18,091) $ (59,364) $ (40,927) $ (331,555) Cash and cash equivalents, beginning of period 2,233 84,433 25,069 356,624 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ (15,858) $ 25,069 $ (15,858) $ 25,069 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net cash and cash equivalents is comprised of: Cash and cash equivalents $ - $ (29,316) $ - $ 29,316 Bank indebtedness (15,858) (4,247) (15,858) (4,247) ------------------------------------------------------------------------- Net cash and cash equivalents (bank indebtedness), end of period $ (15,858) $ 25,069 $ (15,858) $ 25,069 ------------------------------------------------------------------------- ------------------------------------------------------------------------- MAPLE LEAF FOODS INC. Segmented Financial Information (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Year ended December 31, December 31, 2010 2009 2010 2009 ------------------------------------------------------------------------- (Unaudited) (Unaudited) Sales Meat Products Group $ 762,561 $ 842,175 $ 3,181,134 $ 3,310,393 Agribusiness Group 56,167 50,686 199,498 206,064 Bakery Products Group 393,307 432,042 1,587,487 1,705,145 ------------------------------------------------------------------------- $ 1,212,035 $ 1,324,903 $ 4,968,119 $ 5,221,602 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings from operations before restructuring and other related costs, change in fair value of non-designated interest rate swaps and other income Meat Products Group $ 39,513 $ 24,244 $ 89,701 $ 55,388 Agribusiness Group 14,731 14,505 50,834 48,023 Bakery Products Group 22,296 21,896 93,206 102,155 Non-allocated costs (5,097) (2,805) (11,706) (9,455) ------------------------------------------------------------------------- $ 71,443 $ 57,840 $ 222,035 $ 196,111 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital expenditures Meat Products Group $ 17,056 $ 17,532 $ 66,423 $ 86,770 Agribusiness Group 3,711 4,749 16,978 13,048 Bakery Products Group 21,600 17,220 78,903 63,075 ------------------------------------------------------------------------- $ 42,367 $ 39,501 $ 162,304 $ 162,893 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Depreciation and amortization Meat Products Group $ 16,453 $ 17,928 $ 71,933 $ 76,077 Agribusiness Group 4,098 4,431 16,447 16,508 Bakery Products Group 13,080 13,215 53,405 56,904 ------------------------------------------------------------------------- $ 33,631 $ 35,574 $ 141,785 $ 149,489 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- As at As at December 31, December 31, 2010 2009 ------------------------------------------------------------------------- Total assets Meat Products Group $ 1,572,940 $ 1,653,389 Agribusiness Group 276,913 287,057 Bakery Products Group 976,897 955,469 Non-allocated assets 170,045 161,549 ------------------------------------------------------------------------- $ 2,996,795 $ 3,057,464 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Goodwill Meat Products Group $ 442,123 $ 442,943 Agribusiness Group 14,142 14,136 Bakery Products Group 394,117 400,199 ------------------------------------------------------------------------- $ 850,382 $ 857,278 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>For further information: Lynda Kuhn, SVP Communications, 416-926-2026, www.mapleleaf.com