TORONTO, Feb. 22, 2006 (Canada NewsWire via COMTEX News Network) — Maple Leaf Foods Inc. (TSX:MFI) today reported
its financial results for the fourth quarter ended December 31, 2005.
“We had a year of many extraordinary accomplishments, achieving strong
financial results in the first three quarters despite underlying commodity
challenges,” said Michael McCain, President and CEO. “However, we ended the
year on a disappointing note, as our growth engines in the consumer products
and fresh bakery businesses were impacted by high energy and related
inflationary costs. A downturn in the performance of our Japanese pork
business, mostly driven by a rapid decline in the Japanese currency,
compounded the earnings decline in the quarter, overshadowing the significant
improvements we made throughout the year in our fresh pork operations.”
“We will be implementing price increases in 2006 to offset higher costs,
and are maintaining a steady focus on increasing margins and shareholder value
through innovation, brand and market leadership – adding value at every step
in our food chain.”
Sales for the fourth quarter decreased 10% to $1.6 billion compared with
$1.8 billion for the prior year, due to lower commodity prices that affected
the Company’s pork, poultry, feed and rendering businesses, and lower sales to
Japan. Sales for the year increased 2% to $6.5 billion, primarily due to the
acquisition of Schneider Foods in April 2004 and an increase in fresh bakery
sales.
Earnings from operations before restructuring costs decreased 31% to
$51.7 million for the fourth quarter and increased 3% to $263.0 million for
the year. Earnings from operations for the year excluded $13.2 million
($8.3 million after tax and minority interest) in restructuring costs incurred
in the first quarter of 2005. Management believes that this is the most
appropriate basis on which to evaluate operating results, as restructuring
costs are not representative of continuing operations.
Sales and earnings comparisons are also affected by the inclusion of an
additional week of operations in the fourth quarter of 2004 which affect sales
and earnings comparisons in the fourth quarter and full year.
Net earnings for the fourth quarter declined to $18.2 million ($0.14 per
share) from $32.4 million ($0.28 per share) last year. Net earnings for the
year before restructuring costs were $102.6 million ($0.81 per share),
compared to $102.3 million ($0.90 per share) last year. Including
restructuring costs, net earnings for the year were $94.2 million ($0.74 per
share).
Operating Review
—————-
The Company’s Meat Products Group and the Agribusiness Group together
comprise the Protein Value Chain operations, which are involved in producing
animal protein products. These operations are highly interrelated and are
strategically linked through the Company’s Vertical Coordination business
model. While each operation maintains a strong external customer focus, they
are tightly coordinated to deliver superior performance where their operations
intersect. Accordingly, it is more meaningful to review the combined results
of the Protein Value Chain rather than each segment independently.
The following table, which forms the basis of discussion in this document
of the Company’s results of operations, reflects operating earnings by
business segment before restructuring costs:
Earnings from Operations
————————
($ millions) Fourth Quarter Full Year(ii)
---------------------- ----------------------
2005 2004 Change 2005 2004 Change
------ ------ ------ ------ ------ ------
Meat Products Group 10.4 30.6 (66%) 59.9 68.5 (13%)
Agribusiness Group(i) 18.9 21.6 (13%) 101.8 98.7 3%
---------------------- ----------------------
Protein Value Chain 29.3 52.2 (44%) 161.7 167.2 (3%)
Bakery Products Group 22.4 23.1 (3%) 101.3 89.2 14%
---------------------- ----------------------
51.7 75.3 (31%) 263.0 256.4 3%
---------------------- ----------------------
---------------------- ----------------------
(i) Full year figures include $0.2 million of gains related to sales of
poultry production quota compared to $5.2 million in 2004, which
were recorded primarily in the first quarter.
(ii) Full year excludes $13.2 million of restructuring costs in the first
quarter of 2005.
Protein Value Chain
——————-
Protein Value Chain earnings for the fourth quarter declined 44% to
$29.3 million from $52.2 million last year, primarily due to increased energy
and related costs, lower hog prices and lower earnings from the Japanese pork
market. These impacts more than offset contributions from the consumer
products business, an improvement in underlying commodity pork and poultry
processor margins, and lower feed costs in the quarter. Protein Value Chain
earnings for the year declined 3%, reflecting the portfolio balance in the
Protein Value Chain as industry-wide decreases in both pork and poultry
commodity processor margins were offset by increased contributions from
packaged meats and favourable feed costs. In addition, strong earnings from
full year Japanese sales were offset by higher energy costs and lower prices
for rendered products.
Meat Products Group
——————-
(branded value-added prepared meat products; fresh, frozen and branded
value-added pork products; fresh, frozen and branded value-added chicken
and turkey products; and global food marketing, distribution and trading)
Meat Products Group sales for the fourth quarter decreased 13% to
$1.0 billion primarily as a result of lower commodity pork and poultry prices
and a decline in pork sales values and volume to Japan, although somewhat
offset by sales growth in the consumer foods operations. Sales for the year
were up 4% to $4.3 billion compared to $4.1 billion last year, due to the
acquisition of Schneider Foods in April 2004.
Earnings from operations for the fourth quarter declined 66% to
$10.4 million from $30.6 million last year, primarily due to lower profits
from pork sales to Japan and higher energy costs. Margins in the Japanese
market were impacted by a 16% depreciation of the Japanese yen against the
Canadian dollar compared to the first half of 2005, which resulted in an
immediate decline in the sales value and profitability of pork exports. The
impact of the Japanese market, compounded by high energy and related
inflationary costs, outweighed the benefit of improved underlying pork and
poultry commodity markets and improved manufacturing efficiencies and sales
mix. Earnings from the consumer foods operations declined due to higher energy
costs, timing of advertising and promotional spending to support brand
positioning and new product launches, and weaker U.S. sales. This business
will implement price increases through early 2006 to offset inflationary
costs.
Earnings from operations for the year declined 13% to $59.9 million from
$68.5 million in 2004, primarily due to a significant decline in industry-
wide fresh poultry processor margins. The consumer products operations
recorded excellent results in the year, benefiting from the full-year
contribution of Schneider Foods, lower raw material costs, and the
contribution of higher margin products such as Maple Leaf Fully Cooked Roasts
and Schneiders Lunchmate kits. Fresh pork operations recorded improvements in
the year, benefiting from a higher value product sales mix, including strong
results from sales to Japan in the first three quarters, lower manufacturing
costs, and a modest improvement in the underlying North American pork
processor spread in the latter half of 2005. Increasing margins through
innovation and value added processing continues to be a major focus. In the
year, Maple Leaf Fresh Grill! marinated pork, chicken and beef products were
launched, along with Maple Leaf Fresh Roast!, a line of ready-to-cook,
seasoned and marinated pork, poultry and beef roasts.
Agribusiness Group
——————
(research, development and supply of quality livestock nutrition products
and services; pet food; swine production; and animal by-products
recycling)
Agribusiness Group sales for the fourth quarter decreased 9% to
$216.6 million from $238.9 million last year, while sales for the year
declined 12% to $816.8 million from $924.9 million. This decline in sales in
the fourth quarter was mainly due to lower market prices for feed and rendered
products, reflecting lower underlying commodity prices.
Earnings from operations for the fourth quarter declined 13% to
$18.9 million from $21.6 million last year, due to underperformance in the
Company’s hog production operations, start-up costs at the new Moncton feed
mill, higher energy related costs, and a 16% decline in hog prices compared to
the fourth quarter last year. The Company had effective ownership of 20% of
the hogs it processed in the fourth quarter. Earnings from rendering
operations increased in the quarter, although results were impacted by high
energy costs and lower exports and commodity prices.
Earnings for the year increased 3% to $101.8 million from $98.7 million
in 2004, benefiting from lower feed costs and higher hog prices. Although hog
profits were higher, the Company’s hog production operations underperformed in
the face of a high Canadian dollar. A number of initiatives are underway to
improve performance and reduce costs in this business. Increased efficiencies
in the rendering operations, which benefited from significant capital
investment in environmental upgrades, contributed positively to earnings
although this was more than offset by a reduction in export volumes, poor
underlying commodity prices and high energy costs. The Company is
commissioning a new commercial scale bio-diesel plant in Quebec, which is
expected to reach full production by mid-2006 and provide an alternate higher
value market for tallow. The animal nutrition operations continued to post
steady results for the quarter and year.
Bakery Products Group
———————
(fresh, frozen and branded value-added bakery products, including frozen
par-baked bakery products; and specialty pasta and sauces)
Bakery Product Group sales for the fourth quarter decreased 2% to
$338.8 million compared to $345.9 million last year, reflecting the inclusion
of an additional week of operating results in the fourth quarter of 2004. Not
including the effect of this additional week, sales increased across the
bakery operations in the fourth quarter of 2005 by 5% over the prior year.
Sales for the year increased 3% to $1.3 billion, reflecting higher prices and
continued growth in higher value whole grain and specialty products.
Earnings from operations in the fourth quarter decreased 3% to
$22.4 million compared to $23.1 million last year, due to higher energy and
distribution costs and the inclusion of an additional week of financial
results in the fourth quarter last year. The business also incurred increased
advertising and promotional spending to support the Dempster’s new brand
positioning, “Nourish Yourself”, and extensions to its WholeGrains line of
high nutrition products. These factors outweighed growth in higher margin
whole grain and higher nutrition fresh bakery products. The Company will begin
implementing price increases in the first quarter of 2006 to offset higher
input costs. Frozen bakery earnings increased over last year, as improved
operating performance in the North American operations offset higher energy
and other inflationary costs. Earnings from the U.K. bakery operations also
increased, benefiting from the commissioning of the new bagel plant in
Rotherham, England earlier in the year.
Earnings from operations for the year increased 14% to $101.3 million
from $89.2 million in 2004. The Bakery Products Group benefited significantly
from a sales mix that is weighted towards health and well-being categories.
Strong sales of branded whole grain, whole wheat and specialty breads and
higher prices contributed to strong earnings growth for the year, offsetting
the impact of rising energy and flour costs, increased advertising and
promotional spending, and costs related to the commissioning of a new bagel
plant in the United Kingdom.
Cash Flow and Financing
———————–
Total debt, net of cash balances, adjusted for the Brandon operating
lease and securitization, was significantly lower than the prior year. The
reduction was primarily due to strong operating cash flows that were partially
offset by the consolidation of several hog investments due to new Canadian
accounting rules.
Interest expense for the fourth quarter was consistent with last year at
$23.6 million, as lower debt balances were offset by higher interest rates.
Interest expense for the year increased to $98.3 million compared to $89.8
million last year. In the fourth quarter of 2004, the Company re-financed a
significant portion of its debt, replacing short-term, lower rate debt with
longer-term, fixed rate notes that have higher interest rates than short-term
floating debt and therefore contributed to higher interest rates paid compared
to last year. A full year impact of the acquisition of Schneider Foods also
contributed to higher interest expense in the current year. At December 2005,
86% of indebtedness was not exposed to interest rate fluctuations.
Cash flow from operating activities for the fourth quarter was
$120.6 million compared to $143.3 million last year driven primarily by lower
net earnings. Cash flow from operating activities for the year increased to
$259.7 million from $235.5 million in 2004. The increase in cash flow for 2005
was largely due to a reduction in long term receivables and an improvement in
operating working capital offset by an increase in future tax assets.
Capital expenditures on plant and equipment for the fourth quarter
decreased to $36.2 million from $48.7 million last year, while expenditures
for the year were $152.1 million compared to $156.8 last year. The most
significant capital investments in 2005 included the construction of a new
feed mill in Atlantic Canada, a biodiesel plant in Quebec, and environmental
upgrades in the rendering operations earlier in the year.
Other Income
————
Other income for the fourth quarter of $2.9 million increased from $0.1
million last year, reflecting increased earnings from equity investments and
insurance proceeds from a claim earlier in the year. Other income for the year
increased to $7.0 million, up from $2.7 million in 2004, due to higher
earnings from equity investments, insurance proceeds, and gains on fixed asset
disposals that were partly offset by a loss on conversion of the convertible
debenture in the first quarter.
Other Matters
————-
Maple Leaf Foods declared a dividend of $0.04 per share payable on
March 31, 2006, to shareholders of record on March 10, 2006.
Maple Leaf Foods Inc. is a leading Canadian food processing company
committed to delivering quality food products to consumers around the world.
Headquartered in Toronto, Canada, the Company employs approximately 24,000
people at its operations across Canada and in the United States, Europe and
Asia. The Company had sales of $6.5 billion in 2005.
An investor presentation related to the Company’s fourth quarter
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 3:00 p.m. EDT on February 22, 2006 to review Maple Leaf Foods’ fourth
quarter financial results. To participate in the call, please dial 416-641-
6113 or 866-542-4239. For those unable to participate, playback will be made
available an hour after the event at 416-695-5800 / 800-408-3053 (Passcode
3176430 ).
A webcast presentation of the fourth quarter financial results will also
be available at http://investor.mapleleaf.ca at 2:30 p.m. EDT via a link. An
archived replay of the webcast will be available following the call at each of
the above links.
This document may contain forward looking information within the meaning
of applicable securities legislation. Forward looking information is based
upon a number of assumptions and is subject to a number of risks and
uncertainties, many of which are beyond Maple Leaf’s control, that could cause
actual results to differ materially from those that are disclosed in or
implied by such forward looking information. Any forward looking information
in this press release speaks as of the date of this press release. Maple Leaf
does not undertake to update any such forward looking information whether as a
result of new information, future events or otherwise. Additional information
about these risks and uncertainties is contained in the filings with
securities regulators including the annual information form and Management’s
Discussion and Analysis accompanying the financial statements in the reports
to shareholders. These filings are also available on the Company’s website at
www.mapleleaf.com.
Consolidated Interim Financial Statements
(Expressed in Canadian dollars)
MAPLE LEAF FOODS INC.
Three and twelve months ended December 31, 2005 and 2004
MAPLE LEAF FOODS INC.
Consolidated Balance Sheets
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
As at December 31,
2005 2004
-------------------------------------------------------------------------
(As restated
Note 2(a))
ASSETS
Current assets
Cash and cash equivalents $ 80,502 $ 111,770
Accounts receivable 247,014 292,462
Inventories 400,848 385,128
Future tax asset - current 15,329 6,708
Prepaid expenses and other assets 12,104 13,218
-----------------------------------------------------------------------
755,797 809,286
Investments in associated companies 61,939 82,302
Property and equipment 1,137,317 973,718
Other long-term assets 261,907 246,603
Future tax asset - non-current 38,499 26,976
Goodwill 847,853 816,408
Other intangibles 86,468 82,840
-------------------------------------------------------------------------
$ 3,189,780 $ 3,038,133
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued charges $ 669,941 $ 637,966
Income and other taxes payable 31,727 27,651
Current portion of long-term debt 110,428 105,910
-----------------------------------------------------------------------
812,096 771,527
Long-term debt 1,032,829 1,052,195
Future tax liability 56,183 29,207
Other long-term liabilities 202,576 205,542
Minority interest 87,425 74,109
Shareholders' equity 998,671 905,553
-------------------------------------------------------------------------
$ 3,189,780 $ 3,038,133
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes to the consolidated financial statements are an
integral part of these statements.
MAPLE LEAF FOODS INC.
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except share amounts)
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
-------------------------------------------------------------------------
(Unaudited) (Unaudited) (As restated
(As restated Note 2(a))
Note 2(a))
Sales $ 1,598,248 $ 1,782,254 $ 6,462,581 $ 6,364,983
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings from
operations before
restructuring costs 51,653 75,271 $ 263,034 $ 256,364
Restructuring costs - - (13,157) -
-------------------------------------------------------------------------
Earnings from operations 51,653 75,271 249,877 256,364
Other income (Note 3) 2,896 131 6,977 2,650
-------------------------------------------------------------------------
Earnings before interest
and income taxes 54,549 75,402 256,854 259,014
Interest expense 23,603 24,697 98,317 89,798
-------------------------------------------------------------------------
Earnings before
income taxes 30,946 50,705 158,537 169,216
Income taxes 9,176 15,581 51,308 57,018
-------------------------------------------------------------------------
Earnings before
minority interest 21,770 35,124 107,229 112,198
Minority interest 3,574 2,701 12,987 9,915
-------------------------------------------------------------------------
Net earnings for
the period $ 18,196 $ 32,423 $ 94,242 $ 102,283
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share
- basic (Note 5) $ 0.14 $ 0.28 $ 0.74 $ 0.90
Earnings per share
- diluted (Note 5) $ 0.14 $ 0.27 $ 0.72 $ 0.89
Weighted average
number of shares
(millions) 127.5 114.4 126.8 113.6
Dividends declared
per share $ 0.04 $ 0.04 $ 0.16 $ 0.16
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes to the consolidated financial statements are an
integral part of these statements.
Consolidated Statements of Retained Earnings
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
Twelve months ended December 31,
2005 2004
-------------------------------------------------------------------------
(As restated
Note 2(a))
Retained earnings, beginning of period $ 159,129 $ 74,982
Net earnings for the period 94,242 102,283
Dividends declared (20,327) (18,136)
Premium on repurchase of share capital (1,237) -
-------------------------------------------------------------------------
Retained earnings, end of period $ 231,807 $ 159,129
The accompanying notes to the consolidated financial statements are an
integral part of these statements.
MAPLE LEAF FOODS INC.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
-------------------------------------------------------------------------
(Unaudited) (Unaudited)
(As restated (As restated
Note 2(a)) Note 2(a))
CASH PROVIDED BY (USED) IN
Operating activities
Net earnings $ 18,196 $ 32,423 $ 94,242 $ 102,283
Add (deduct) items
not affecting cash:
Depreciation and
amortization 33,550 34,230 132,489 125,494
Stock-based
compensation
(Note 4) 2,826 1,590 8,425 4,095
Minority interest 3,574 2,701 12,987 9,915
Future income taxes (18,474) (9,051) (8,921) 7,985
Undistributed
earnings of
associated companies (1,829) (2,985) (7,620) (6,289)
Loss on repayment of
convertible debenture - - 1,108 -
(Gain) loss on sale
of property and
equipment (4,394) 220 (5,814) (892)
(Gain) loss on sale
of investments - 95 363 (417)
Other (17,837) (13,543) (3,026) (21,053)
Change in other
long-term receivables (45) (493) 6,840 (6,018)
Increase in net pension
asset (14,822) (26,024) (39,226) (38,247)
Change in operating
working capital 119,820 124,146 67,836 58,614
-----------------------------------------------------------------------
$ 120,565 $ 143,309 $ 259,683 $ 235,470
Financing activities
Dividends paid (5,105) (4,547) (20,327) (18,136)
Dividends paid to
minority interest (320) (234) (1,031) (956)
Net increase
(decrease) in
long-term debt (58,768) (154,054) (122,356) 250,906
Increase in share
capital 5,710 165,030 19,421 166,243
Shares repurchased
for cancellation (1,989) - (1,989) -
Other (8,459) (17,529) (13,454) (17,529)
-----------------------------------------------------------------------
$ (68,931) $ (11,334) $ (139,736) $ 380,528
Investing activities
Additions to property
and equipment (36,190) (48,669) (152,130) (156,777)
Proceeds from sale
of property and
equipment 6,491 3,583 14,778 12,649
Purchase of net
assets of businesses - (20,676) (10,625) (401,575)
Change in other
investments, net - (1,443) - 1,111
Other (1,495) 274 (3,238) 1,456
-----------------------------------------------------------------------
(31,194) (66,931) (151,215) (543,136)
Increase (decrease)
in cash and cash
equivalents 20,440 65,044 (31,268) 72,862
Cash and cash
equivalents,
beginning of period 60,062 46,726 111,770 38,908
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 80,502 $ 111,770 $ 80,502 $ 111,770
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes to the consolidated financial statements are an
integral part of these statements.
MAPLE LEAF FOODS INC.
Segmented Financial Information
(In thousands of Canadian dollars)
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
-------------------------------------------------------------------------
(Unaudited) (Unaudited)
Sales
Meat Products Group $ 1,042,924 $ 1,197,449 $ 4,300,290 $ 4,127,255
Agribusiness Group 216,560 238,911 816,776 924,912
Bakery Products
Group 338,764 345,894 1,345,515 1,312,816
-------------------------------------------------------------------------
$ 1,598,248 $ 1,782,254 $ 6,462,581 $ 6,364,983
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings from
operations, before
restructuring costs
Meat Products Group $ 10,425 $ 30,607 $ 59,881 $ 68,440
Agribusiness Group 18,883 21,585 101,862 98,736
Bakery Products
Group 22,345 23,079 101,291 89,188
-------------------------------------------------------------------------
$ 51,653 $ 75,271 $ 263,034 $ 256,364
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to property
and equipment
Meat Products Group $ 12,933 $ 15,471 $ 59,287 $ 51,832
Agribusiness Group 9,626 9,268 36,266 34,879
Bakery Products
Group 13,631 23,930 56,577 70,066
-------------------------------------------------------------------------
$ 36,190 $ 48,669 $ 152,130 $ 156,777
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Depreciation and
amortization
Meat Products Group $ 15,427 $ 17,420 $ 62,782 $ 60,816
Agribusiness Group 6,141 5,484 24,502 21,323
Bakery Products
Group 11,976 11,326 45,199 43,355
-------------------------------------------------------------------------
$ 33,544 $ 34,230 $ 132,483 $ 125,494
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at December 31,
2005 2004
-------------------------------------------------------------------------
Total assets
Meat Products Group $ 1,550,439 $ 1,463,253
Agribusiness Group 639,622 603,055
Bakery Products Group 694,519 702,137
Non-allocated assets 305,200 269,688
-------------------------------------------------------------------------
$ 3,189,780 $ 3,038,133
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes to the consolidated financial statements are an
integral part of these statements.
1. THE COMPANY
Maple Leaf Foods Inc. ("Maple Leaf Foods" or the "Company") is a
leading Canadian-based food processing company, serving wholesale,
retail, food service, industrial and agricultural customers across
North America and internationally. The Company's results are
organized into three segments: Meat Products Group, Agribusiness
Group and Bakery Products Group.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Convertible Debentures
Effective January 1, 2005, the Company adopted an amendment to
Canadian accounting principles, section 3860, "Financial
Instruments - Disclosure and Presentation", on a retroactive
basis with restatement of prior periods. The revised standard,
which is effective for January 1, 2005, requires obligations of
a fixed amount that may be settled, at the issuer's option, by
a variable number of the issuer's own equity instruments to be
presented as liabilities. As a result of adopting the revised
standard, the Company reclassified the principal component of
its convertible debenture as a debt instrument and
reclassified the interest, accretion charges and related tax
effects in the statement of earnings in the comparative
periods. The impact of the revised standard was a reduction in
net earnings of $4.5 million (net of tax) for the year ended
December 31, 2004. There was no impact to basic or diluted
earnings per share for prior periods as a result of adopting
this change.
(b) Variable Interest Entities
The Company adopted the guidance in Accounting Guideline 15,
"Consolidation of Variable Interest Entities", retroactively
without restatement of prior periods, effective January 1,
2005. As a result of the adoption, there are several previously
unconsolidated entities that are now consolidated with the
results of the Company. The most significant was the
consolidation of the Company's hog processing facility in
Brandon, Manitoba. This resulted in an increase in assets and
long-term debt of approximately $87.8 million as of
December 31, 2005. In addition, several of the Company's
investments in various previously equity accounted hog
facilities are now consolidated. The results of the
consolidation of these hog production facilities is an increase
in debt of approximately $19.7 million and an increase in total
assets of approximately $29.0 million. There was no impact on
the net earnings of the Company arising from the consolidation
of these entities.
(c) Comparative figures
Certain 2004 comparative figures have been reclassified to
conform with the financial statement presentation adopted in
2005.
3. OTHER INCOME (EXPENSE)
---------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
---------------------------------------------------------------------
Earnings from associated
companies $ 492 $ 286 $ 3,131 $ 985
Gain (loss) on sale of
property and equipment 2,077 (220) 3,498 892
Dividends received 71 32 510 144
Gain (loss) on disposal
of investments - (95) 363 417
Rental income 539 178 300 458
Earnings (loss) from
real estate operations (283) (50) 283 (246)
Loss on redemption of
convertible debenture - - (1,108) -
---------------------------------------------------------------------
$ 2,896 $ 131 $ 6,977 $ 2,650
---------------------------------------------------------------------
---------------------------------------------------------------------
4. STOCK-BASED COMPENSATION
The stock compensation expense during the fourth quarter was
$2.8 million (2004: $1.6 million) and $8.4 million for the full year
(2004: $4.1 million). The Company granted 17,500 stock options
(2004: 23,750) at a weighted average exercise price per share of
$14.90 (2004: $14.56) and 14,500 restricted stock units (2004:
12,625) in the quarter. The fair value of the stock options and
restricted stock units granted during the quarter was immaterial
(2004: immaterial) and $0.1 million (2004: $0.1 million),
respectively.
5. EARNINGS PER SHARE
The following table sets forth the calculation of basic and fully
diluted earnings per share:
-------------------------------------------------------------------------
Three months ended December 31,
2005 2004
-------------------------------------------------------------------------
Weighted Weighted
Net Average Net Average
Earnings Shares(ii) EPS Earnings Shares(ii) EPS
----------------------------- -----------------------------
Basic $ 18,196 127.5 $ 0.14 $ 32,423 114.4 $ 0.28
Stock
options(i) - 2.9 - - 1.8 -
Convertible
debt - - - 1,223 6.1 -
-------------------------------------------------------------------------
Diluted $ 18,196 130.4 $ 0.14 $ 33,646 122.3 $ 0.27
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Twelve months ended December 31,
2005 2004
-------------------------------------------------------------------------
Weighted Weighted
Net Average Net Average
Earnings Shares(ii) EPS Earnings Shares(ii) EPS
----------------------------- -----------------------------
Basic $ 94,242 126.8 $ 0.74 $102,283 113.6 $ 0.90
Stock
options(i) - 3.2 - - 1.1 -
Convertible
debt - - - 4,882 6.1 -
-------------------------------------------------------------------------
Diluted $ 94,242 130.0 $ 0.72 $107,165 120.8 $ 0.89
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(i) Excludes the effect of approximately 10.7 million options and
restricted stock units to purchase common shares for the three
months ended December 31 (2004: 11.4 million) and 10.3 million
options and restricted stock units to purchase common shares for the
twelve months ended December 31 (2004: 12.1 million) that are
anti-dilutive
(ii) In millions
>>
SOURCE: Maple Leaf Foods Inc.
Contact: Lynda Kuhn, Vice-President, Public & Investor Relations, (416) 926-2026
www.mapleleaf.com