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Maple Leaf Foods Reports Results for Second Quarter 2013

TSX: MFI

TORONTO, July 31, 2013 /PRNewswire/ – Maple Leaf Foods Inc. (TSX: MFI) today
reported its financial results for the second quarter ended June 30,
2013
.

  • Adjusted Operating Earnings(1)(2) for the second quarter was $22.8 million compared to $63.1 million last
    year. Year-to-date Adjusted Operating Earnings were $30.4 million
    compared $94.8 million last year
  • Net earnings(2) for the second quarter was $nil, compared to $26.0 million last year.
    For the first six months, net loss was $14.7 million compared to net
    earnings of $20.2 million last year
  • Adjusted Earnings per Share(2)(3) was $0.02 compared to $0.23 last year. Year-to-date Adjusted Earnings
    per Share was a loss of $0.04 compared to $0.29 last year.

“Market conditions which affected first quarter results continued into
the second quarter, although there was material improvement in
important areas”, said Michael H. McCain, President & CEO. “Hog
production returns, global pork markets and volatile raw material
markets all contributed to a material year-over-year earnings decline.
This was compounded by the costs of transition and start-ups in our new
prepared meat manufacturing and distribution network. These factors
more than offset strong growth in prepared meats volumes from earlier
in the year and solid improvement in the Bakery segment, which we
expect will accelerate. Market conditions are expected to improve and
our commercial fundamentals are good. Overall, we are satisfied with
our strategic progress, although we are now at the peak of change and
expect earnings volatility through this transition.”

1. Adjusted Operating Earnings, a non-IFRS measure, is used by Management
to evaluate financial operating results. It is defined as earnings
before income taxes adjusted for items that are not considered
representative of on-going operational activities of the business, and
items where the economic impact of the transactions will be reflected
in earnings in future periods when the underlying asset is sold or
transferred. Please refer to the section entitled Reconciliation of
Non-IFRS Financial Measures at the end of this news release.
2. 2012 figures have been restated for the impact of adopting the revised
International Accounting Standard 19 Employee Benefits (“IAS 19”), as
disclosed in Note 25 of the Company’s unaudited condensed consolidated
interim financial statements.
3. Adjusted Earnings per Share, a non-IFRS measure, is used by Management
to evaluate on-going financial operating results. It is defined as
basic earnings per share attributable to common shareholders, and is
adjusted for all items that are not considered representative of
on-going operational activities of the business, and items where the
economic impact of the transactions will be reflected in earnings in
future periods when the underlying asset is sold or transferred. Please
refer to the section entitled Reconciliation of Non-IFRS Financial
Measures at the end of this news release.

Financial Overview

Maple Leaf Foods Inc. (“the Company”) sales of $1,214.2 million for the
second quarter declined 3.7% from last year, or 2.2% after adjusting
for the impacts of divestitures and foreign exchange, due to lower
volumes which were partly offset by higher pricing. For the first six
months sales decreased 3.9% from the prior year to $2,327.1 million, or
2.3% after adjusting for divestitures and foreign exchange, due to the
same factors.

Adjusted Operating Earnings for the second quarter decreased 63.9% to
$22.8 million compared to $63.1 million last year, as earnings in the
Protein Group were impacted by unfavourable market conditions, which
were only partly offset by stronger Bakery Group results. For the first
six months, Adjusted Operating Earnings declined to $30.4 million
compared to $94.8 million last year.

Net earnings for the second quarter decreased to $nil (loss of $0.02 per
share attributable to common shareholders) compared to $26.0 million
($0.17 per share attributable to common shareholders) last year. Net
earnings included $15.4 million ($0.08 per share) of pre-tax expenses
related to restructuring and other related costs (2012: $9.8 million,
or $0.06 per share). Year-to-date net loss was $14.7 million ($0.12
loss per basic share) compared to earnings of $20.2 million ($0.13 per
share) last year. The year-to-date net loss included $62.8 million
($0.32 per share) of pre-tax expenses related to restructuring and
other related costs (2012: $30.1 million, or $0.16 per share).

Adjusted Earnings per Share in the second quarter decreased to $0.02
compared to $0.23 last year. Year-to-date Adjusted Earnings per Share
declined to a loss of $0.04 compared to $0.29 last year.

Several items are excluded from the discussions of underlying earnings
performance as they are not representative of on-going operational
activities. Refer to the section entitled Reconciliation of Non-IFRS
Financial Measures at the end of this News Release for a description
and reconciliation of all non-IFRS financial measures.

Business Segment Review

Following is a summary of sales by business segment:

($ thousands) Second Quarter Year-to-Date
(Unaudited) 2013 2012 2013 2012
Meat Products Group $ 751,302 $ 775,971 1,428,259 $ 1,501,508
Agribusiness Group 65,432 79,543 132,882 144,840
Protein Group $ 816,734 $ 855,514 $ 1,561,141 $ 1,646,348
Bakery Products Group 397,486 404,736 765,912 774,725
Sales $ 1,214,220 $ 1,260,250 $ 2,327,053 $ 2,421,073

The following table summarizes Adjusted Operating Earnings by business
segment:

($ thousands) Second Quarter Year-to-Date
(Unaudited) 2013 2012(1) 2013 2012(1)
Meat Products Group $ (11,492) $ 15,274 $ (21,944) $ 30,403
Agribusiness Group 1,726 18,138 7,106 36,292
Protein Group $ (9,766) $ 33,412 $ (14,838) $ 66,695
Bakery Products Group 32,684 31,244 46,808 33,603
Non-allocated Costs in Adjusted Operating Earnings(2) (121) (1,559) (1,619) (5,470)
Adjusted Operating Earnings $ 22,797 $ 63,097 $ 30,351 $ 94,828
1. 2012 Adjusted Operating Earnings have been restated for the impact of
adopting the revised International Accounting Standard 19 Employee
Benefits (“IAS 19”), as disclosed in Note 25 of the Company’s unaudited
condensed consolidated interim financial statements
2. Non-allocated costs comprise expenses not separately identifiable to
business segment groups, and do not form part of the measures used by
the Company when assessing the segments’ operating results.

Protein Group

Results for the Protein Group, which includes the operations of the
Company’s Meat Products and Agribusiness Groups, should be viewed in
totality due to intercompany transactions and correlated factors within
these operations.

Sales for the second quarter in the Protein Group declined 4.5% to
$816.7 million from $855.5 million last year. For the first six months,
sales decreased 5.2% to $1,561.1 million. The quarter and year-to-date
declines were primarily driven by lower volumes and the divestiture of
the Company’s potato processing business, partly offset by higher
pricing.

Adjusted Operating Earnings in the second quarter declined to a loss of
$9.8 million compared to Adjusted Operating Earnings of $33.4 million
last year, reflecting a combination of poor market conditions and
higher near-term costs related to the implementation of its prepared
meats strategy.

For the first six months, Adjusted Operating Earnings decreased to a
loss of $14.8 million compared to Adjusted Operating Earnings of $66.7
million
last year, due to similar factors noted above with the addition
of lower prepared meats volumes in the first quarter of 2013.

Meat Products Group
Includes value-added prepared meats, lunch kits; and fresh pork, poultry
and turkey products sold to retail, foodservice, industrial and
convenience channels. Includes leading Canadian brands such as Maple
Leaf
®, Schneiders ® and many leading sub-brands.

Meat Products Group sales for the second quarter declined 3.2% to $751.3
million
, or 1.4% after adjusting for the impact of divesting the
Company’s potato processing business and foreign exchange. This was the
result of lower volumes in primary pork processing, partly offset by
higher pricing in fresh and prepared meats. For the first six months,
sales declined 4.9% or 2.8% after adjusting for the impact of divesting
the Company’s potato processing business and foreign exchange, due to
similar factors as well as lower prepared meats volumes in the first
quarter.

Adjusted Operating Earnings for the second quarter declined to a loss of
$11.5 million compared to earnings of $15.3 million last year,
primarily due to lower earnings in the prepared meats and primary pork
processing businesses.

Higher transitional costs compared to last year were incurred as the
Company implements its strategy to increase scale, productivity and
profitability in its prepared meats business. In the quarter,
commissioning activities at three large plant expansions in Western
Canada resulted in higher costs. Earnings were also impacted by higher
raw material costs, driven primarily by an increase in pork belly
prices. Retail volumes increased from last year but were offset by a
decline in lower-margin foodservice volumes.

Earnings in primary pork processing continued to be negatively affected
by the devaluation of the Japanese Yen, which was partly offset by
improving primary processing spreads and higher margins in other export
markets. Earnings in fresh poultry were affected by higher feed and
related live bird costs, partly offset by higher volumes, pricing and
increased sales into higher margin channels. The sale of the Company’s
potato processing business reduced Adjusted Operating Earnings by
approximately $4 million in the second quarter compared to last year.

For the first six months, Adjusted Operating Earnings declined to a loss
of $21.9 million compared to Adjusted Operating Earnings of $30.4
million
last year due to similar factors noted above, with the addition
of lower volumes in the prepared meats business during the first
quarter of 2013. The sale of the Company’s potato processing business
reduced Adjusted Operating Earnings for the first six months by
approximately $7 million compared to last year.

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

Sales in the Agribusiness Group for the second quarter were $65.4
million
, 17.7% lower than last year due to a decline in biodiesel
volumes, which was partly offset by higher pricing. Sales for the first
six months declined 8.3% to $132.9 million due to similar factors.

Adjusted Operating Earnings in the second quarter declined to $1.7
million
compared to $18.1 million last year, primarily due to increased
hog production losses resulting from higher feed costs. In addition
earnings declined in the by-products recycling business as a result of
lower biodiesel volumes and higher raw material costs.

Year-to-date Adjusted Operating Earnings decreased to $7.1 million
compared to $36.3 million last year, almost entirely driven by the
increase in hog production losses.

Bakery Products Group
Includes fresh and frozen bakery products, including breads, rolls,
bagels, specialty and artisan breads, sweet goods, and fresh pasta and
sauces sold to retail, foodservice and convenience channels. It
includes national brands such as Dempster’s
®, Tenderflake®, Olivieri® and New York Bakery CoTM, and many leading regional brands.

Bakery Products Group sales for the second quarter decreased 1.8% to
$397.5 million, or 0.7% after adjusting for discontinued bread
categories in the U.K. and currency translation on sales in the U.S.
and U.K. Lower sales volumes in the fresh bakery business were
partially offset by volume growth in the U.K. as well as higher pricing
implemented during the first quarter in the fresh and North American
frozen bakery businesses.

Sales for the first six months decreased 1.1% to $765.9 million compared
to $774.7 million last year, but were consistent with last year after
adjusting for discontinued bread categories in the U.K. and currency
translation due to similar factors.

Second quarter Adjusted Operating Earnings increased 4.6% to $32.7
million
compared to $31.2 million last year, driven by higher earnings
in the fresh bakery, U.K. bakery, and fresh pasta businesses.

Earnings in the fresh bakery business increased as a result of reduced
costs and improved operating efficiencies. Also contributing to
earnings were lower sales waste and SG&A expenses. These benefits were
partly offset by a decline in volume. During the quarter, the Company
closed a third bakery in the Toronto area, eliminating any future
duplicative overhead costs associated with consolidating production at
its bakery in Hamilton, Ontario.

Performance in the North American frozen bakery business was consistent
as earlier price increases offset inflationary costs and lower volumes.
Results in the fresh pasta business increased mainly due to lower SG&A
costs. Earnings in the U.K. bakery business improved primarily due to
higher volumes in both bagels and croissants. This business continues
to benefit from network consolidation, investment in scale facilities
and focus on its core categories.

For the first six months, Adjusted Operating Earnings increased 39.3% to
$46.8 million compared to $33.6 million last year. Operational
improvements and lower SG&A expenses more than offset lower volumes,
mainly in the fresh bakery business. Price increases earlier in the
year also contributed to earnings growth, but this was largely offset
by higher raw material and other inflationary costs.

Other Matters

In July the company sold its turkey agricultural operations for gross
proceeds of $48.2 million. The assets and liabilities associated with
the turkey agricultural operations are classified as assets held for
sale as at June 30, 2013.

On July 30, 2013, the Company declared a dividend of $0.04 per share
payable September 30, 2013 to shareholders of record at the close of
business on September 6, 2013. Unless indicated otherwise by the
Company in writing on or before the time the dividend is paid, the
dividend will be considered an Eligible Dividend for the purposes of
the “Enhanced Dividend Tax Credit System”.

An investor presentation related to the Company’s second quarter
financial results is available at www.mapleleaffoods.com and can be found under Investor Relations on the Quarterly Results
page. A conference call will be held at 2:30 p.m. EDT on July 31, 2013
to review Maple Leaf Foods’ second quarter financial results. To
participate in the call, please dial 416-340-8061 or 866-225-0198. For
those unable to participate, playback will be made available an hour
after the event at 905-694-9451 / 800-408-3053 (Passcode 3231342).

A webcast presentation of the second quarter financial results will also
be available at http://edge.media-server.com/m/p/2pus9m49/lan/en

The Company’s full financial statements and related Management’s
Discussion and Analysis are available for download on the Company’s
website.

Reconciliation of Non-IFRS Financial Measures

The Company uses the following non-IFRS measures: Adjusted Operating
Earnings and Adjusted EPS. Management believes that these non-IFRS
measures provide useful information to both Management and investors in
measuring the financial performance of the Company for the reasons
outlined below. These measures do not have a standardized meaning
prescribed by IFRS and therefore they may not be comparable to
similarly titled measures presented by other publicly traded companies
and should not be construed as an alternative to other financial
measures determined in accordance with IFRS.

Adjusted Operating Earnings

Adjusted Operating Earnings, a non-IFRS measure, is used by Management
to evaluate financial operating results. It is defined as earnings
before income taxes adjusted for items that are not considered
representative of on-going operational activities of the business, and
items where the economic impact of the transactions will be reflected
in earnings in future periods when the underlying asset is sold or
transferred. The table below provides a reconciliation of net earnings
as reported under IFRS in the unaudited consolidated interim statements
of earnings to Adjusted Operating Earnings for the three and six months
ended, as indicated below. Management believes that this basis is the
most appropriate on which to evaluate operating results, as they are
representative of the on-going operations of the Company.

Three months ended June 30, 2013
Meat Bakery
($ thousands) Products Agribusiness Products Unallocated
(Unaudited) Group Group Group costs Consolidated
Net earnings $ 9
Income taxes 252
Earnings before income taxes $ 261
Interest expense 16,836
Change in the fair value of non-designated
interest rate swaps (658)
Other (income) expense (1,541) (1,430) 1,878 (3,129) (4,222)
Restructuring and other related costs 14,384 1,043 15,427
Earnings (loss) from Operations $ (11,492) $ 1,726 $ 32,684 $ 4,726 $ 27,644
Decrease in fair value of biological assets 185 185
Unrealized gains on commodity futures contracts (5,032) (5,032)
Adjusted Operating Earnings (loss) $ (11,492) $ 1,726 $ 32,684 $ (121) $ 22,797
Three months ended June 30, 2012(1)
Meat Bakery
($ thousands) Products Agribusiness Products Unallocated
(Unaudited) Group Group Group costs Consolidated
Net earnings $ 25,988
Income taxes 10,672
Earnings before income taxes $ 36,660
Interest expense 18,413
Change in the fair value of non-designated
interest rate swaps 220
Other (income) expense (2,259) (433) (1,349) 624 (3,417)
Restructuring and other related costs 8,571 1,205 9,776
Earnings (loss) from Operations $ 15,274 $ 18,138 $ 31,244 $ (3,004) $ 61,652
Decrease in fair value of biological assets 3,233 3,233
Unrealized gains on commodity futures contracts (1,788) (1,788)
Adjusted Operating Earnings (loss) $ 15,274 $ 18,138 $ 31,244 $ (1,559) $ 63,097
(1) 2012 Net loss and Adjusted Operating Earnings have been restated for the
impact of adopting the revised International Accounting Standard 19
Employee Benefits (“IAS 19”), as disclosed in Note 25 of the Company’s
unaudited condensed

consolidated interim financial statements

Six months ended June 30, 2013
Meat Bakery
($ thousands) Products Agribusiness Products Unallocated
(Unaudited) Group Group Group costs Consolidated
Net loss $ (14,733)
Income taxes (10,211)
Loss before income taxes $ (24,944)
Interest expense 33,336
Change in the fair value of non-designated
interest rate swaps (1,275)
Other (income) expense (44,935) (568) 4,392 (3,922) (45,033)
Restructuring and other related costs 49,597 11,454 1,745 62,796
Earnings (loss) from Operations $ (21,944) $ 7,106 $ 46,808 $ (7,090) $ 24,880
Decrease in fair value of biological assets 5,463 5,463
Unrealized losses on commodity futures contracts 8 8
Adjusted Operating Earnings (loss) $ (21,944) $ 7,106 $ 46,808 $ (1,619) $ 30,351

Six months ended June 30, 2012(1)
Meat Bakery
($ thousands) Products Agribusiness Products Unallocated
(Unaudited) Group Group Group costs Consolidated
Net earnings $ 20,213
Income taxes 10,502
Earnings before income taxes $ 30,715
Interest expense 36,056
Change in the fair value of non-designated
interest rate swaps (4,933)
Other (income) expense (2,167) (523) (1,371) 760 (3,301)
Restructuring and other related costs 23,043 7,089 30,132
Earnings (loss) from Operations $ 30,403 $ 36,292 $ 33,603 $ (11,629) $ 88,669
Decrease in fair value of biological assets 1,101 1,101
Unrealized losses on commodity futures contracts 5,058 5,058
Adjusted Operating Earnings (loss) $ 30,403 $ 36,292 $ 33,603 $ (5,470) $ 94,828
(1) 2012 Net loss and Adjusted Operating Earnings have been restated for the
impact of adopting the revised International Accounting Standard 19
Employee Benefits (“IAS 19”), as disclosed in Note 25 of the Company’s
unaudited condensed consolidated interim financial statements

Adjusted Earnings per Share

Adjusted Earnings per Share, a non-IFRS measure, is used by Management
to evaluate on-going financial operating results. It is defined as
basic earnings per share attributable to common shareholders, and is
adjusted for items that are not considered representative of on-going
operational activities of the business, and items where the economic
impact of the transactions will be reflected in earnings in future
periods when the underlying asset is sold or transferred. The table
below provides a reconciliation of basic earnings per share as reported
under IFRS in the unaudited consolidated interim statements of earnings
to Adjusted Earnings per Share for the three and six months ended, as
indicated below. Management believes this basis is the most appropriate
on which to evaluate financial results as they are representative of
the on-going operations of the Company.

Three months ended Six months ended
($ per share) June 30, June 30,
(Unaudited) 2013 2012(5) 2013 2012(5)
Basic earnings (loss) per share $ (0.02) $ 0.17 $ (0.12) $ 0.13
Restructuring and other related costs(1) 0.08 0.06 0.32 0.16
Items not considered representative of on-going operations(2) (0.01) (0.27)
Change in the fair value of non-designated interest rate swaps(3) (0.01) (0.03)
Change in the fair value of unrealized (gains) losses on commodity
futures contracts(3) (0.03) (0.01) 0.02
Change in the fair value of biological assets(3) 0.02 0.03 0.01
Adjusted Earnings per Share(4) $ 0.02 $ 0.23 $ (0.04) $ 0.29
(1) Includes per share impact of restructuring and other related costs, net
of tax and non-controlling interest.
(2) Includes gains/losses associated with non-operational activities,
including gains/losses related to restructuring activities, business
combinations, discontinued operations, assets held for sale, and hedge
ineffectiveness recognized in earnings, all net of tax.
(3) Includes per share impact of the change in fair value of non-designated
interest rate swaps, unrealized (gains) losses on commodity futures
contracts and the change in fair value of biological assets, net of
tax.
(4) May not add due to rounding.
(5) 2012 basic loss and Adjusted Earnings per Share have been restated for
the impact of adopting the revised International Accounting Standard 19
Employee Benefits (“IAS 19”), as disclosed in Note 25 of the Company’s
unaudited condensed consolidated interim financial statements.

Forward-Looking Statements

This document contains, and the Company’s oral and written public
communications often contain, “forward-looking information” within the
meaning of applicable securities law. These statements are based on
current expectations, estimates, forecasts and projections about the
industries in which the Company operates and beliefs and assumptions
made by the Management of the Company. Such statements include, but are
not limited to, statements with respect to objectives and goals, as
well as statements with respect to beliefs, plans, objectives,
expectations, anticipations, estimates and intentions. Specific
forward-looking information in this document includes, but is not
limited to, statements with respect to the anticipated benefits,
timing, actions, costs and investments associated with the Company’s
Value Creation Plan, expectations regarding improving business trends,
expectations regarding actions to reduce costs, restore and/or promote
volumes and/or increase prices, improve efficiencies, expected
duplicative overhead costs incurred due to the concurrent operation of
the new Hamilton fresh bakery and existing bakeries, the expected use
of cash balances, source of funds for ongoing business requirements,
capital investments and debt repayment, and expectations regarding
sufficiency of the allowance for uncollectible accounts. Words such as
“expect”, “anticipate”, “intend”, “attempt”, “may”, “will”, “plan”,
“believe”, “seek”, “estimate”, and variations of such words and similar
expressions are intended to identify such forward-looking information.
These statements are not guarantees of future performance and involve
assumptions and risks and uncertainties that are difficult to predict.

In addition, these statements and expectations concerning the
performance of the Company’s business in general are based on a number
of factors and assumptions including, but not limited to: the condition
of the Canadian, U.S., U.K. and Japanese economies; the rate of
exchange of the Canadian dollar to the U.S. dollar, U.K. British pound
and the Japanese yen; the availability and prices of raw materials,
energy and supplies; product pricing; the availability of insurance;
the competitive environment and related market conditions; improvement
of operating efficiencies whether as a result of the Value Creation
Plan or otherwise; continued access to capital; the cost of compliance
with environmental and health standards; no adverse results from
ongoing litigation; no unexpected actions of domestic and foreign
governments; and the general assumption that none of the risks
identified below or elsewhere in this document will materialize. All
of these assumptions have been derived from information currently
available to the Company including information obtained by the Company
from third-party sources. These assumptions may prove to be incorrect
in whole or in part. In addition, actual results may differ materially
from those expressed, implied or forecasted in such forward-looking
information, which reflect the Company’s expectations only as of the
date hereof.

Factors that could cause actual results or outcomes to differ materially
from the results expressed, implied or forecasted by forward-looking
information is discussed more fully in the Company’s Annual
Management’s Discussion and Analysis for the period ended December 31,
2012
including the section entitled “Risk Factors”, that are updated
each quarter in the Management’s Discussion and Analysis, and are
available on SEDAR at www.sedar.com. The Company does not intend to, and the Company disclaims any
obligation to, update any forward-looking information, whether written
or oral, or whether as a result of new information, future events or
otherwise except as required by law.

Maple Leaf Foods Inc. (“Maple Leaf” or the “Company”) is a leading
Canadian value-added meat, meals and bakery company committed to
delivering quality food products to consumers around the world.
Headquartered in Toronto, Canada, the Company employs approximately
20,000 people at its operations across Canada and in the United States,
Europe and Asia.

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

MAPLE LEAF FOODS INC.

Three and six months ended June 30, 2013 and 2012

Consolidated Balance Sheets

(In thousands of Canadian dollars) As at June 30, As at June 30, As at December 31, As at January 1,
(Unaudited) 2013 2012 2012 2012
(Restated) (Restated) (Restated)
ASSETS
Current assets
Cash and cash equivalents $ 145,608 $ 83,631 $ 90,414 $
Accounts receivable 111,732 108,014 116,503 133,504
Notes receivable 111,074 124,323 125,487 98,545
Inventories 328,905 319,722 301,804 293,231
Biological assets 75,882 53,259 78,127 49,265
Income and other taxes recoverable 36,657 45,831 41,527 43,789
Prepaid expenses and other assets 20,350 18,946 12,590 24,688
Assets held for sale 55,467 25,502 37,087
$ 885,675 $ 779,228 $ 803,539 $ 643,022
Property and equipment 1,284,416 1,090,473 1,212,177 1,067,246
Investment property 11,515 12,305 11,979 11,232
Employee benefits 128,378 119,002 107,831 133,942
Other long-term assets 13,873 11,244 13,663 11,926
Deferred tax asset 119,149 130,892 132,558 127,456
Goodwill 741,605 754,150 753,156 753,739
Intangible assets 200,246 203,821 208,793 191,896
Total assets $ 3,384,857 $ 3,101,115 $ 3,243,696 $ 2,940,459
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness $ 7,685 $ 15,209 $ 48,243 $ 36,404
Accounts payable and accruals 509,266 482,917 446,911 482,059
Provisions 34,591 31,942 26,335 44,255
Current portion of long-term debt 6,749 5,739 6,573 5,618
Other current liabilities 16,196 17,543 14,961 20,409
$ 574,487 $ 553,350 $ 543,023 $ 588,745
Long-term debt 1,337,945 1,122,186 1,206,945 941,956
Employee benefits 298,209 382,811 420,933 350,853
Provisions 39,626 28,963 25,800 28,936
Other long-term liabilities 53,684 77,459 80,084 88,153
Deferred tax liability 12,376 8,749 8,912 11,703
Total liabilities $ 2,316,327 $ 2,173,518 $ 2,285,697 $ 2,010,346
Shareholders’ equity
Share capital $ 902,986 $ 902,810 $ 902,810 $ 902,810
Retained earnings (deficit) 14,694 (96,872) (72,701) (78,674)
Contributed surplus 91,687 75,066 75,913 64,327
Accumulated other
comprehensive loss (8,687) (12,530) (13,263) (17,042)
Treasury stock (1,350) (6,347) (1,845) (6,347)
Total shareholders’ equity $ 999,330 $ 862,127 $ 890,914 $ 865,074
Non-controlling interest 69,200 65,470 67,085 65,039
Total equity $ 1,068,530 $ 927,597 $ 957,999 $ 930,113
Total liabilities and equity $ 3,384,857 $ 3,101,115 $ 3,243,696 $ 2,940,459

Consolidated Statements of Earnings (Loss)

(In thousands of Canadian dollars, except share amounts) Three months ended June 30, Six months ended June 30,
(Unaudited) 2013 2012 2013 2012
(Restated) (Restated)
Sales $ 1,214,220 $ 1,260,250 $ 2,327,053 $ 2,421,073
Cost of goods sold 1,064,348 1,060,504 2,049,866 2,050,386
Gross margin $ 149,872 $ 199,746 $ 277,187 $ 370,687
Selling, general and administrative expenses 122,228 138,094 252,307 282,018
Earnings before the following: $ 27,644 $ 61,652 $ 24,880 $ 88,669
Restructuring and other related costs (15,427) (9,776) (62,796) (30,132)
Change in fair value of non-designated
interest rate swaps 658 (220) 1,275 4,933
Other income (expense) 4,222 3,417 45,033 3,301
Earnings before interest and income taxes $ 17,097 $ 55,073 $ 8,392 $ 66,771
Interest expense 16,836 18,413 33,336 36,056
Earnings (loss) before income taxes $ 261 $ 36,660 $ (24,944) $ 30,715
Income taxes 252 10,672 (10,211) 10,502
Net earnings (loss) $ 9 $ 25,988 $ (14,733) $ 20,213
Attributed to:
Common shareholders $ (2,454) $ 23,379 $ (17,392) $ 17,588
Non-controlling interest 2,463 2,609 2,659 2,625
$ 9 $ 25,988 $ (14,733) $ 20,213
Earnings (loss) per share attributable to
common shareholders
Basic earnings (loss) per share $ (0.02) $ 0.17 $ (0.12) $ 0.13
Diluted earnings (loss) per share $ (0.02) $ 0.16 $ (0.12) $ 0.12
Weighted average number of shares (millions) 139.9 139.5 139.9 139.5

Consolidated Statements of Comprehensive Income (Loss)

(In thousands of Canadian dollars) Three months ended June 30, Six months ended June 30,
(Unaudited) 2013 2012 2013 2012
(Restated) (Restated)
Net earnings (loss) $ 9 $ 25,988 $ (14,733) $ 20,213
Other comprehensive income (loss)
Items that will not be reclassified
to profit or loss:
Change in actuarial gains and losses 54,538 (23,973) 117,272 (25,089)
Total items that will not be reclassified
to profit or loss 54,538 (23,973) 117,272 (25,089)
Items that are or may be reclassified
subsequently to profit or loss:
Change in accumulated foreign currency
translation adjustment 4,231 2,500 4,984 283
Change in unrealized gains and losses
on cash flow hedges 1,570 537 299 4,243
Total items that are or may be reclassified
subsequently to profit or loss 5,801 3,037 5,283 4,526
$ 60,339 $ (20,936) $ 122,555 $ (20,563)
Comprehensive income (loss) $ 60,348 $ 5,052 $ 107,822 $ (350)
Attributed to:
Common shareholders $ 56,650 $ 2,345 $ 103,165 $ (2,713)
Non-controlling interest 3,698 2,707 4,657 2,363

Consolidated Statement of Changes in Total Equity

Attributable to Common Shareholders
Total
accumulated
Retained other Non-
(In thousands of Canadian dollars) Share earnings Contributed comprehensive Treasury controlling Total
(Unaudited) capital (deficit) surplus loss stock interest equity
Balance at
December 31, 2012 $ 902,810 $ (72,701) $ 75,913 $ (13,263) $ (1,845) $ 67,085 $ 957,999
(restated)
Net earnings (loss) (17,392) 2,659 (14,733)
Other comprehensive
income (loss) 115,981 4,576 1,998 122,555
Dividends declared
($0.08 per share) (11,194) (2,542) (13,736)
Stock-based compensation
expense 10,761 10,761
Exercise of stock options 176 176
Issuance of treasury stock (495) 495
Modification of DSU plan 3,508 3,508
Other 2,000 2,000
Balance at June 30, 2013 $ 902,986 $ 14,694 $ 91,687 $ (8,687) $ (1,350) $ 69,200 $ 1,068,530
Attributable to Common Shareholders
Total
accumulated
other Non-
(In thousands of Canadian dollars) Share Retained Contributed comprehensive Treasury controlling Total
(Unaudited) capital deficit surplus loss stock interest equity
(Restated)
Balance at
January 1, 2012 $ 902,810 $ (78,674) $ 64,327 $ (17,042) $ (6,347) $ 65,039 $ 930,113
(restated)
Net earnings 17,588 2,625 20,213
Other comprehensive
income (loss) (24,813) 4,512 (262) (20,563)
Dividends declared
($0.08 per share) (10,973) (1,932) (12,905)
Stock-based compensation
expense 10,739 10,739
Balance at June 30, 2012 $ 902,810 $ (96,872) $ 75,066 $ (12,530) $ (6,347) $ 65,470 $ 927,597

Consolidated Statements of Cash Flows

(In thousands of Canadian dollars) Three months ended June 30, Six months ended June 30,
(Unaudited) 2013 2012 2013 2012
(Restated) (Restated)
CASH (USED IN) PROVIDED BY:
Operating activities
Net earnings (loss) $ 9 $ 25,988 $ (14,733) $ 20,213
Add (deduct) items not affecting cash:
Change in fair value of biological assets 185 3,233 5,463 1,101
Depreciation and amortization 35,417 33,180 69,269 64,569
Stock-based compensation 5,201 5,303 10,761 10,739
Deferred income taxes (7,444) 1,387 (22,182) (637)
Income tax current 7,696 9,285 11,971 11,139
Interest expense 16,836 18,413 33,336 36,056
Gain on sale of property and equipment (525) (433) (1,481) (413)
Gain on sale of assets held for sale (168) (320) (45,556) (320)
Gain on sale of investment property (323) (323)
Gain on acquisition 985
Change in fair value of non-designated
interest rate swaps (658) 220 (1,275) (4,933)
Change in fair value of
derivative financial instruments (3,457) (326) 1,510 5,623
Impairment of assets (net of reversals) 675 5,809
Increase in pension liability 4,881 4,490 12,629 13,101
Net income taxes paid (4,963) (3,920) (12,037) (9,519)
Interest paid (16,383) (18,585) (31,814) (35,378)
Change in provision for restructuring
and other related costs 3,846 1,141 41,951 6,584
Other (6,195) (874) (11,185) (1,822)
Change in non-cash operating working capital 62,431 27,299 41,574 (35,571)
Cash provided by operating activities $ 97,061 $ 105,481 $ 94,672 $ 80,532
Financing activities
Dividends paid $ (5,598) $ (5,393) $ (11,194) $ (10,973)
Dividends paid to non-controlling interest (1,271) (661) (2,542) (1,169)
Net increase in long-term debt 69,967 30,000 113,492 180,000
Exercise of stock options 176
Other 293 (321) 293 (783)
Cash provided by financing activities $ 63,391 $ 23,625 $ 100,225 $ 167,075
Investing activities
Additions to long-term assets $ (89,377) $ (63,633) $ (165,432) $ (119,439)
Acquisition of business (922) (31,130)
Capitalization of interest expense (3,945) (1,307) (7,195) (2,521)
Proceeds from sale of long-term assets 11,846 7,760 74,404 10,306
Other 3 3
Cash used in investing activities $ (81,476) $ (57,177) $ (99,145) $ (142,781)
Increase in cash and cash equivalents $ 78,976 $ 71,929 $ 95,752 $ 104,826
Net cash and cash equivalents, beginning of period 58,947 (3,507) 42,171 (36,404)
Net cash and cash equivalents, end of period $ 137,923 $ 68,422 $ 137,923 $ 68,422
Net cash and cash equivalents is comprised of:
Cash and cash equivalents $ 145,608 $ 83,631 $ 145,608 $ 83,631
Bank indebtedness (7,685) (15,209) (7,685) (15,209)
Net cash and cash equivalents, end of period $ 137,923 $ 68,422 $ 137,923 $ 68,422

Segmented Financial Information

Three months ended June 30, Six months ended June 30,
2013 2012 2013 2012
Sales
Meat Products Group $ 751,302 $ 775,971 $ 1,428,259 $ 1,501,508
Agribusiness Group 65,432 79,543 132,882 144,840
Bakery Products Group 397,486 404,736 765,912 774,725
$ 1,214,220 $ 1,260,250 $ 2,327,053 $ 2,421,073
Earnings before restructuring and other related
costs and other income
Meat Products Group $ (11,492) $ 15,274 $ (21,944) $ 30,403
Agribusiness Group 1,726 18,138 7,106 36,292
Bakery Products Group 32,684 31,244 46,808 33,603
Non-allocated costs 4,726 (3,004) (7,090) (11,629)
$ 27,644 $ 61,652 $ 24,880 $ 88,669
Capital expenditures
Meat Products Group $ 73,062 $ 46,159 $ 139,206 $ 85,131
Agribusiness Group 5,401 2,614 7,845 5,694
Bakery Products Group 10,914 14,860 18,381 28,614
$ 89,377 $ 63,633 $ 165,432 $ 119,439
Depreciation and amortization
Meat Products Group $ 16,851 $ 15,151 $ 32,419 $ 29,917
Agribusiness Group 4,096 3,983 8,252 7,926
Bakery Products Group 14,470 14,046 28,598 26,726
$ 35,417 $ 33,180 $ 69,269 $ 64,569
As at June 30, As at June 30, As at December 31, As at January 1,
2013 2012 2012 2012
Total assets
Meat Products Group $ 1,756,916 $ 1,548,254 $ 1,617,413 $ 1,465,576
Agribusiness Group 274,898 222,849 275,167 223,013
Bakery Products Group 1,021,971 991,870 1,005,432 937,292
Non-allocated assets 331,072 338,142 345,684 314,578
$ 3,384,857 $ 3,101,115 $ 3,243,696 $ 2,940,459
Goodwill
Meat Products Group $ 428,828 $ 442,726 $ 442,925 $ 442,336
Agribusiness Group 13,845 13,845 13,845 13,845
Bakery Products Group 298,932 297,579 296,386 297,558
$ 741,605 $ 754,150 $ 753,156 $ 753,739

SOURCE Maple Leaf Foods Inc.

Investor Contact: Nick Boland,
VP Investor Relations: 416-926-2005
Media Contact: 416-926-2020