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Maple Leaf Foods Reports Results for the Second Quarter 2015

TORONTO, July 30, 2015 /CNW/ – Maple Leaf Foods Inc. (TSX: MFI) today
reported its financial results for the second quarter, June 30, 2015.

  • Adjusted Operating Earnings(1)(2) for the second quarter increased by $33.8 million compared to last year
  • Adjusted EBITDA(2)(3) margin increased to 6.0% from 0.7% in the second quarter last year and
    4.7% in the first quarter of 2015
  • Adjusted Earnings per Share(2)(4) for the quarter was $0.13 compared to a loss of $0.12 last year
  • Net loss from continuing operations for the second quarter was $7.5
    million
    compared to a loss of $39.5 million last year
  • The Company closed its eighth and final legacy facility as part of its
    prepared meats network strategy

“We are very pleased with the progress we made in the second quarter,”
said Michael H. McCain, President and CEO. “We delivered improved
volumes with strong commercial performance. We marked a major milestone
with the closing of the last of our remaining legacy facilities, which
brought an end to our duplicative supply chain, and continued to
improve the operational efficiency of our new start-up plants. All of
these factors contributed to a significant improvement in earnings,
consecutive quarter-over-quarter growth in EBITDA margin, and positive
free cash flow. Over the balance of the year, we have aggressive plans
to build on our commercial momentum and a clear line of sight on how to
capture the additional benefits from our new plants and deliver our 10%
EBITDA margin target.”

Financial Overview

Maple Leaf Foods Inc. (“the Company”) recorded sales from continuing
operations of $820.8 million for the second quarter of 2015, a decrease
of 1.3% from last year, or 2.6% after adjusting for the impact of
foreign exchange. The decrease was primarily a result of lower selling
prices due to lower market values within the Meat Products Group,
partially offset by improved volume. Sales from continuing operations
for the first six months was $1,601.0 million, an increase of 3.8%, or
2.5% after adjusting for the impact of foreign exchange, due to
improved volume and a favourable sales mix, partially offset by lower
selling prices due to lower market values within the Meat Products
Group.

Adjusted Operating Earnings for the second quarter increased to $21.8 million compared to a loss of
$12.1 million last year. The Meat Products Group benefited from
improved margins and reduced duplicative overhead in prepared meats and
improved margins in fresh poultry, partially offset by lower margins in
fresh pork. For the first six months, Adjusted Operating Earnings
improved to $32.2 million compared to a loss of $42.0 million last
year, due to factors similar to those noted above for the quarter and
improved earnings in fresh pork.

Adjusted Earnings per Share was $0.13 for the second quarter of 2015
compared to a loss of $0.12 last year. For the first six months,
Adjusted Earnings per Share was $0.18 compared to a loss of $0.36 last
year.

Net loss from continuing operations for the second quarter was $7.5
million
(loss of $0.05 per share(5)) compared to a loss of $39.5 million (loss of $0.28 per share) last
year. This included $7.3 million ($0.04 per share) of restructuring and
other related costs (2014: $20.0 million, or $0.11 per share). The
improvement in the quarter was due primarily to similar factors as
noted above, lower restructuring and other related costs and interest
expenses. For the first six months, net loss from continuing operations
was $10.3 million (loss of $0.07 per share) compared to a loss of
$164.2 million (loss of $1.17 per share) last year. This included $18.1
million
($0.10 per share) of restructuring and other related costs
(2014: $41.8 million, or $0.22 per share). The year-to-date decrease
was primarily due to non-recurring financing costs that were incurred
last year in relation to the repayment of the Company’s outstanding
debt, lower selling, general and administrative costs, and similar
factors discussed above.

Several items are excluded from the discussions of underlying earnings
performance as they are not representative of ongoing 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 non-IFRS financial measures.

Business Segment Review

Following is a summary of sales by business segment:

(Unaudited) Second Quarter Year-to-Date
($ thousands) 2015 2014 2015 2014
Meat Products Group $ 817,223 $ 825,553 $ 1,593,632 $ 1,530,952
Agribusiness Group 3,553 6,237 7,392 12,185
Total Sales(2) $ 820,776 $ 831,790 $ 1,601,024 $ 1,543,137

The following table summarizes Adjusted Operating Earnings by business
segment:

(Unaudited) Second Quarter Year-to-Date
($ thousands) 2015 2014 2015 2014
Meat Products Group $ 17,680 $ (15,644) $ 25,558 $ (43,091)
Agribusiness Group 4,109 5,208 6,641 4,862
Protein Group $ 21,789 $ (10,436) $ 32,199 $ (38,229)
Non-Allocated Costs in Adjusted Operating Earnings(6) (1,614) (3,749)
Adjusted Operating Earnings(2) $ 21,789 $ (12,050) $ 32,199 $ (41,978)

Meat Products Group

Includes value-added prepared meats, lunch kits and snacks, and fresh
pork and poultry products sold under leading Canadian brands such as
Maple Leaf®, Schneiders® and many leading regional brands.

Sales in the Meat Products Group for the second quarter decreased 1.0%
to $817.2 million, or 2.3% after adjusting for the weaker Canadian
dollar. The decrease was a result of lower market prices in fresh pork
partially offset by a favourable sales mix in fresh poultry, primarily
driven by growth in branded poultry, and improved volume in prepared
meats. The volume decline experienced in response to a price increase
that was implemented in the second quarter of 2014 has now been largely
restored.

For the first six months, sales increased 4.1% to $1,593.6 million, or
2.8% after adjusting for the weaker Canadian dollar, due primarily to a
price increase implemented in prepared meats in the second quarter of
2014, increased volume in fresh pork and a favourable sales mix in
fresh poultry.

Adjusted Operating Earnings for the second quarter increased to $17.7
million
compared to a loss of $15.6 million last year, as a result of
improved earnings in prepared meats, which benefited from normalized
market conditions and lower operating costs compared to last year. This
included a reduction in duplicative overhead, as the Company closed its
eighth and final legacy plant, eliminating the last component of its
duplicative supply chain. Earnings in fresh poultry increased as a
result of improvements in margins driven by a favourable sales mix and
operating efficiencies, which was partially offset by lower earnings in
fresh pork as a result of reduced margins.

For the first six months, Adjusted Operating Earnings increased to $25.6
million
compared to a loss of $43.1 million last year, due to similar
factors noted above and improved earnings in the fresh pork business
year-to-date, as a result of increased margins.

Agribusiness Group

Includes Canadian hog production operations that primarily supply the
Meat Products Group with livestock as well as toll feed sales.

Sales in the Agribusiness Group for the second quarter declined to $3.6
million
compared to $6.2 million last year, due to lower external sales
volume for feed. Sales in the first six months declined to $7.4 million
compared to $12.2 million last year due to the same reason.

Adjusted Operating Earnings in the second quarter decreased to $4.1
million
compared to $5.2 million last year as increased operating
overhead relating to the conversion of existing farms to loose sow
housing was partially offset by the benefit of hog prices, net of
hedging activities. For the first six months, Adjusted Operating
Earnings increased to $6.6 million compared to $4.9 million last year,
as the benefit from hog prices, net of hedging activities, more than
offset increased operating overhead.

Other Matters

On July 30, 2015, the Company declared a dividend of $0.08 per share
payable September 30, 2015, to shareholders of record at the close of
business on September 4, 2015. 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”.

Conference Call

An investor presentation related to the Company’s second quarter
financial results is available at www.mapleleaffoods.com and can be found under Investor Material on the Investors page. A conference call will be held at 10:30 a.m. EDT on July 31,
2015
, to review Maple Leaf Foods’ second quarter financial results. To
participate in the call, please dial 416-340-2219 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 2541434).

A webcast presentation of the second quarter financial results will also
be available at:

http://edge.media-server.com/m/p/jr5vz2tb/lan/en

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

Reconciliation of Non-IFRS Financial Measures

The Company uses, among others, the following non-IFRS measures:
Adjusted Operating Earnings and Adjusted Earnings per Share. Management
believes that these non-IFRS measures provide useful information to
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 net earnings
(loss) before income taxes from continuing operations adjusted for
items that are not considered representative of ongoing 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 (loss) from continuing operations as
reported under IFRS in the unaudited consolidated interim statements of
earnings (loss) 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 ongoing operations of the Company.

Three months ended June 30, 2015
($ thousands)
(Unaudited)
Meat
Products
Group
Agribusiness
Group
Non-allocated
costs
Consolidated
Net earnings (loss) from continuing operations $ (7,519)
Income taxes (6,410)
Earnings (loss) before income taxes from continuing operations $ (13,929)
Interest expense and other financing costs 1,062
Other (income) expense 170 (66) 744 848
Restructuring and other related costs 5,623 1,666 7,289
Earnings (loss) from continuing operations $ 17,680 $ 4,109 $ (26,519) $ (4,730)
Decrease (increase) in fair value of biological assets(7) 24,160 24,160
Unrealized (gains) loss on futures contracts(7) 2,359 2,359
Adjusted Operating Earnings $ 17,680 $ 4,109 $ $ 21,789
Three months ended June 30, 2014
($ thousands)
(Unaudited)
Meat Products
Group
Agribusiness
Group
Non-allocated
costs
Consolidated
Net earnings (loss) from continuing operations $ (39,544)
Income taxes (13,863)
Earnings (loss) before income taxes from continuing operations $ (53,407)
Interest expense and other financing costs 9,652
Change in the fair value of non-designated interest rate swaps (1,382)
Other (income) expense 1,053 (163) 3,810 4,700
Restructuring and other related costs 11,074 8,922 19,996
Earnings (loss) from continuing operations $ (15,644) $ 5,208 $ (10,005) $ (20,441)
Decrease (increase) in fair value of biological assets(7) 18,884 18,884
Realized (gains) loss on futures contracts(7) 16,100 16,100
Unrealized (gains) loss on futures contracts(7) (26,727) (26,727)
Modification of long-term incentive plan(8) 134 134
Adjusted Operating Earnings(2) $ (15,644) $ 5,208 $ (1,614) $ (12,050)
Six months ended June 30, 2015
($ thousands)
(Unaudited)
Meat
Products
Group
Agribusiness
Group
Non-allocated
costs
Consolidated
Net earnings (loss) from continuing operations $ (10,321)
Income taxes (7,341)
Earnings (loss) before income taxes from continuing operations $ (17,662)
Interest expense and other financing costs 2,286
Other (income) expense 363 (63) 6,385 6,685
Restructuring and other related costs 14,153 3,981 18,134
Earnings (loss) from continuing operations $ 25,558 $ 6,641 $ (22,756) $ 9,443
Decrease (increase) in fair value of biological assets(7) 31,443 31,443
Unrealized (gains) loss on futures contracts(7) (8,687) (8,687)
Adjusted Operating Earnings $ 25,558 $ 6,641 $ $ 32,199
Six months ended June 30, 2014
($ thousands)
(Unaudited)
Meat Products
Group
Agribusiness
Group
Non-allocated
costs
Consolidated
Net earnings (loss) from continuing operations $ (164,150)
Income taxes (58,056)
Earnings (loss) before income taxes from continuing operations $ (222,206)
Interest expense and other financing costs 124,363
Change in the fair value of non-designated interest rate swaps (2,492)
Other (income) expense 527 (454) 3,334 3,407
Restructuring and other related costs 22,546 19,216 41,762
Earnings (loss) from continuing operations $ (43,091) $ 4,862 $ (16,937) $ (55,166)
Decrease (increase) in fair value of biological assets(7) (21,422) (21,422)
Realized (gains) loss on futures contracts(7) 16,100 16,100
Unrealized (gains) loss on futures contracts(7) 9,776 9,776
Modification of long-term incentive plan(8) 8,734 8,734
Adjusted Operating Earnings(2) $ (43,091) $ 4,862 $ (3,749) $ (41,978)

Adjusted Earnings per Share

Adjusted Earnings per Share, a non-IFRS measure, is used by Management
to evaluate ongoing financial operating results. It is defined as basic
earnings (loss) per share from continuing operations attributable to
common shareholders, and is adjusted on the same basis as Adjusted
Operating Earnings. The table below provides a reconciliation of basic
earnings (loss) per share from continuing operations as reported under
IFRS in the unaudited consolidated interim statements of earnings
(loss) 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 ongoing operations of the Company.

($ per Share)
(Unaudited)
Three months ended June 30, Six months ended June 30,
2015 2014(13) 2015 2014(13)
Basic earnings (loss) per share from continuing operations $ (0.05) $ (0.28) $ (0.07) $ (1.17)
Restructuring and other related costs(9) 0.04 0.11 0.10 0.22
Items included in other income not considered representative of ongoing
operations(10)
0.02 0.03 0.02
Change in the fair value of non-designated interest rate swaps(11) (0.01)
Change in the fair value of unrealized (gain) loss on futures contracts(11) 0.01 (0.14) (0.05) 0.05
Change in the fair value of realized (gain) loss on futures contracts(11) 0.08 0.09
Change in the fair value of biological assets(11) 0.13 0.10 0.17 (0.11)
Other financing costs(12) (0.01) 0.51
Modification impact to long-term incentive plan(8) 0.05
Adjusted Earnings per Share(14) $ 0.13 $ (0.12) $ 0.18 $ (0.36)

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, as well as 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, in addition to 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 Value
Creation Plan; expectations regarding the use of derivatives, futures
and options; expectations regarding improving efficiencies; the
expected use of cash balances; source of funds for ongoing business
requirements; capital investments; expectations regarding acquisitions
and divestitures; LEED certification; expectations regarding the
adoption of new accounting standards and the impact of such adoption on
financial position; expectations regarding sufficiency of the allowance
for uncollectible accounts; and expectations regarding pension plan
performance and future pension plan liabilities and contributions.
Words such as “expect”, “anticipate”, “intend”, “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., and Japanese economies; the rate of exchange of
the Canadian dollar to the U.S. dollar, 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 include, among other things:

  • risks associated with the Company focusing solely on the protein
    business;
  • risks related to the Company’s decisions regarding any potential return
    of capital to shareholders;
  • risks associated with implementing and executing the Value Creation
    Plan;
  • risks associated with the availability of capital;
  • risks associated with changes in the Company’s information systems and
    processes;
  • risks posed by food contamination, consumer liability, and product
    recalls;
  • risks associated with acquisitions, divestitures, and capital expansion
    projects;
  • impact on pension expense and funding requirements of fluctuations in
    the market prices of fixed income and equity securities and changes in
    interest rates;
  • cyclical nature of the cost and supply of hogs and the competitive
    nature of the pork market generally;
  • risks related to the health status of livestock;
  • impact of a pandemic on the Company’s operations;
  • the Company’s exposure to currency exchange risks;
  • ability of the Company to hedge against the effect of commodity price
    changes through the use of commodity futures and options;
  • impact of changes in the market value of the biological assets and
    hedging instruments;
  • impact of international events on commodity prices and the free flow of
    goods;
  • risks posed by compliance with extensive government regulation;
  • risks posed by litigation;
  • impact of changes in consumer tastes and buying patterns;
  • impact of extensive environmental regulation and potential environmental
    liabilities;
  • risks associated with a consolidating retail environment;
  • risks posed by competition;
  • risks associated with complying with differing employment laws and
    practices, the potential for work stoppages due to non-renewal of
    collective agreements, and recruiting and retaining qualified
    personnel;
  • risks associated with pricing the Company’s products;
  • risks associated with managing the Company’s supply chain; and
  • risks associated with failing to identify and manage the strategic risks
    facing the Company.

The Company cautions the reader that the foregoing list of factors is
not exhaustive. These factors are discussed in more detail under the
heading “Risk Factors” in the Company’s Management Discussion and
Analysis for the fiscal year ended December 31, 2014, which is
available on SEDAR at www.sedar.com. The reader should review such section in detail. Some of the
forward-looking information may be considered to be financial outlooks
for purposes of applicable securities legislation including, but not
limited to, statements concerning future Adjusted EBITDA margins;
capital expenditures; cash costs; and non-cash restructuring charges.
These financial outlooks are presented to allow the Company to
benchmark the results of the Value Creation Plan. These financial
outlooks may not be appropriate for other purposes and readers should
not assume they will be achieved. 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.
Additional information concerning the Company, including the Company’s
Annual Information Form and Management’s Discussion and Analysis for
the fiscal year ended December 31, 2014 is available on SEDAR at www.sedar.com. Maple Leaf Foods Inc. is a leading Canadian consumer protein company.
Headquartered in Mississauga, Canada, the Company employs approximately
12,000 people at its operations in Canada and Asia.

Footnote Legend

  1. Adjusted Operating Earnings, a non-IFRS measure, is used by Management
    to evaluate financial operating results. It is defined as earnings
    from continuing operations 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 in this news release.
  2. 2014 figures exclude the results of the Bakery Products Group. The
    Bakery Products Group results are reported as discontinued operations
    as disclosed in Note 22 of the Company’s 2015 second quarter unaudited
    condensed consolidated interim financial statements.
  3. Adjusted EBITDA is calculated as earnings from continuing operations
    before interest and income taxes plus depreciation and intangible asset
    amortization, adjusted for items that are not considered representative
    of ongoing 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 Non-IFRS Financial Measures in the
    Company’s Management Discussion and Analysis for the second quarter of
    2015.
  4. Adjusted Earnings per Share, a non-IFRS measure, is used by Management
    to evaluate ongoing financial operating results. It is defined as basic
    earnings per share from continuing operations attributable to common
    shareholders, and is adjusted on the same basis as Adjusted Operating
    Earnings. Please refer to the section entitled Reconciliation of
    Non-IFRS Financial Measures in this news release.
  5. Unless otherwise stated, all per share amounts are presented as per
    basic share attributable to common shareholders.
  6. Non-allocated costs are comprised of 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.
  7. Regarding biological assets, please refer to Note 7 of the Company’s
    2015 second quarter unaudited condensed consolidated interim financial
    statements. Unrealized and realized gains/losses on futures contracts
    and settlement of long-term incentive plan are reported within cost of
    sales and selling, general and administrative expenses respectively in
    the Company’s 2015 second quarter unaudited condensed consolidated
    interim financial statements.
  8. Relates to an $8.7 million modification of long-term incentive
    compensation plan as a result of the costs being fixed and payments
    accelerated, which was a decision made conditional on the sale of
    Canada Bread, and is therefore not considered representative of ongoing
    operational activities of the business.
  9. Includes per share impact of restructuring and other related costs, net
    of tax.
  10. Includes gains/losses associated with non-operational activities,
    including gains/losses related to discontinued operations, assets held
    for sale, and hedge ineffectiveness recognized in earnings, all net of
    tax.
  11. Includes per share impact of the change in fair value of non-designated
    interest rate swaps, unrealized and realized (gains) losses on futures
    contracts and the change in fair value of biological assets, net of
    tax.
  12. Includes a $76.3 million early repayment premium to lenders, $12.7
    million
    in financing costs, and a $9.6 million loss transferred from
    accumulated other comprehensive income into earnings related to the
    settlement of interest rate swaps that are no longer designated as
    hedging instruments.
  13. 2014 figures reflect the reclassification of the change in fair value of
    non-designated interest rate swaps to other income. Refer to Note 20 of
    the Company’s 2015 second quarter unaudited condensed consolidated
    interim financial statements for further details.
  14. May not add due to rounding.
Condensed Consolidated Interim Financial Statements
MAPLE LEAF FOODS INC.
Six months ended June 30, 2015 and 2014
Consolidated Balance Sheets
(In thousands of Canadian dollars)
As at June 30, As at June 30, As at December 31,
2015 2014 2014
(Unaudited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 409,923 $ 539,610 $ 496,328
Accounts receivable 55,419 51,981 60,396
Notes receivable 109,862 119,963 110,209
Inventories 280,082 275,101 270,401
Biological assets 79,912 126,096 105,743
Income and other taxes recoverable 36,273
Prepaid expenses and other assets 23,359 27,769 20,157
Assets held for sale 484 634 1,107
$ 959,041 $ 1,177,427 $ 1,064,341
Property and equipment 1,057,526 1,031,767 1,042,506
Investment property 7,493 3,204 3,312
Employee benefits 73,744 110,872 88,162
Other long-term assets 11,740 9,061 9,881
Deferred tax asset 76,738 700 74,986
Goodwill 428,236 428,236 428,236
Intangible assets 147,145 182,335 165,066
Total assets $ 2,761,663 $ 2,943,602 $ 2,876,490
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accruals $ 277,806 $ 278,907 $ 275,249
Provisions 36,037 52,576 60,443
Current portion of long-term debt 729 407 472
Income taxes payable 17,319 26,614
Other current liabilities 38,737 35,992 24,383
$ 370,628 $ 367,882 $ 387,161
Long-term debt 9,990 9,911 10,017
Employee benefits 170,670 142,622 196,482
Provisions 16,370 27,499 17,435
Other long-term liabilities 21,849 23,193 20,899
Deferred tax liability 19,393
Total liabilities $ 589,507 $ 590,500 $ 631,994
Shareholders’ equity
Share capital $ 921,438 $ 922,888 $ 936,479
Retained earnings 1,214,585 1,344,343 1,228,815
Contributed surplus 36,300 82,994 79,652
Accumulated other comprehensive income (loss) associated with continuing
operations
105 4,227 (226)
Treasury stock (272) (1,350) (224)
Total shareholders’ equity $ 2,172,156 $ 2,353,102 $ 2,244,496
Total liabilities and equity $ 2,761,663 $ 2,943,602 $ 2,876,490
Consolidated Statements of Net Earnings (Loss)
(In thousands of Canadian dollars, except share amounts) Three months ended June 30, Six months ended June 30,
(Unaudited) 2015 2014 2015 2014
Sales $ 820,776 $ 831,790 $ 1,601,024 $ 1,543,137
Cost of goods sold 745,038 772,466 1,436,064 1,435,878
Gross margin $ 75,738 $ 59,324 $ 164,960 $ 107,259
Selling, general and administrative expenses 80,468 79,765 155,517 162,425
Earnings (loss) from continuing operations before the following: $ (4,730) $ (20,441) $ 9,443 $ (55,166)
Restructuring and other related costs (7,289) (19,996) (18,134) (41,762)
Change in fair value of non-designated interest rate swaps 1,382 2,492
Other income (expense) (848) (4,700) (6,685) (3,407)
Earnings (loss) before interest and income taxes from continuing
operations
$ (12,867) $ (43,755) $ (15,376) $ (97,843)
Interest expense and other financing costs 1,062 9,652 2,286 124,363
Earnings (loss) before income taxes from continuing operations $ (13,929) $ (53,407) $ (17,662) $ (222,206)
Income taxes (6,410) (13,863) (7,341) (58,056)
Earnings (loss) from continuing operations $ (7,519) $ (39,544) $ (10,321) $ (164,150)
Earnings (loss) from discontinued operations (5) 938,399 (64) 931,011
Net earnings (loss) $ (7,524) $ 898,855 $ (10,385) $ 766,861
Attributed to:
Common shareholders $ (7,524) $ 897,797 $ (10,385) $ 764,886
Non-controlling interest 1,058 1,975
$ (7,524) $ 898,855 $ (10,385) $ 766,861
Earnings (loss) per share attributable to common shareholders:
Basic and diluted earnings (loss) per share $ (0.05) $ 6.38 $ (0.07) $ 5.45
Basic and diluted earnings (loss) per share from continuing operations $ (0.05) $ (0.28) $ (0.07) $ (1.17)
Weighted average number of shares (millions) 142.6 140.7 142.7 140.4
Consolidated Statements of Other Comprehensive Income (Loss)
(In thousands of Canadian dollars) Three months ended June 30, Six months ended June 30,
(Unaudited) 2015 2014 2015 2014
Net earnings (loss) $ (7,524) $ 898,855 $ (10,385) $ 766,861
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss:
Actuarial gains and losses
(Net of tax of $1.5 million and $6.6 million; 2014: $1.2 million and
$1.0 million)
$ 4,252 $ (3,545) $ 18,959 $ (2,831)
Total items that will not be reclassified to profit or loss $ 4,252 $ (3,545) $ 18,959 $ (2,831)
Items that are or may be reclassified subsequently to profit or loss:
Change in accumulated foreign currency translation adjustment
(Net of tax of $0.0 million; 2014: $0.0 million) $ (515) $ (560) $ 567 $ (215)
Change in unrealized gains and losses on cash flow hedges
(Net of tax of $1.6 million and $0.1 million; 2014: $2.2 million and
$3.0 million)
4,666 6,017 (236) 8,236
Total items that are or may be reclassified subsequently to profit or
loss
$ 4,151 $ 5,457 $ 331 $ 8,021
Other comprehensive income (loss) from continuing operations $ 8,403 $ 1,912 $ 19,290 $ 5,190
Other comprehensive income (loss) from discontinued operations(i)
(Net of tax of $0.0 million; 2014: $1.2 million and $1.3 million) (5,429) (569)
Total other comprehensive income (loss) $ 8,403 $ (3,517) $ 19,290 $ 4,621
Comprehensive income (loss) $ 879 $ 895,338 $ 8,905 $ 771,482
Attributed to:
Common shareholders $ 879 $ 895,187 $ 8,905 $ 769,751
Non-controlling interest $ $ 151 $ $ 1,731
(i) The above amount includes $0.0 million for the three and six months
ended June 30, 2015 (2014: $3.6 million and $4.4 million) relating to
actuarial gains and losses that will not subsequently be re-classified
to profit or loss.

Consolidated Statements of Changes in Total Equity
Attributable to Common Shareholders
Total Total
accumulated accumulated
other other
comprehensive comprehensive
income (loss) income (loss)
associated with associated with Non-
(In thousands of Canadian dollars) Share Retained Contributed continuing assets Treasury controlling Total
(Unaudited) capital earnings surplus operations held for sale stock interest equity
Balance at December 31, 2014 $ 936,479 $ 1,228,815 $ 79,652 $ (226) $ $ (224) $ 2,244,496
Net earnings (loss) (10,385) (10,385)
Other comprehensive income (loss) 18,959 331 19,290
Dividends declared ($0.16 per share) (22,804) (22,804)
Stock-based compensation expense 4,215 4,215
Obligation for repurchase of shares (5,510) (15,070) (20,580)
Repurchase of shares (11,719) (30,191) (41,910)
Issuance of treasury stock (2,306) 1,140 (1,166)
Exercise of stock options 2,188 2,188
Shares purchased by RSU trust (1,188) (1,188)
Balance at June 30, 2015 $ 921,438 $ 1,214,585 $ 36,300 $ 105 $ $ (272) $ $ 2,172,156
Attributable to Common Shareholders
Total Total
accumulated accumulated
other other
comprehensive comprehensive
income (loss) income (loss)
associated with associated with Non-
(In thousands of Canadian dollars) Share Retained Contributed continuing assets Treasury controlling Total
(Unaudited) capital earnings surplus operations held for sale stock interest equity
Balance at December 31, 2013 $ 905,216 $ 602,717 $ 79,139 $ (4,593) $ $ (1,350) $ 60,863 $ 1,641,992
Net earnings (loss) 764,886 1,975 766,861
Transfer to held for sale 799 (799)
Other comprehensive income (loss) (6,045) 8,021 2,889 (244) 4,621
Dividends declared ($0.08 per share) (11,271) (3,017) (14,288)
Stock-based compensation expense 19,867 19,867
Disposal of business (2,090) (59,577) (61,667)
Exercise of stock options 17,672 17,672
Modification of stock compensation plan (5,944) (16,012) (21,956)
Balance at June 30, 2014 $ 922,888 $ 1,344,343 $ 82,994 $ 4,227 $ $ (1,350) $ $ 2,353,102
Consolidated Statements of Cash Flow
(In thousands of Canadian dollars) Three months ended June 30, Six months ended June 30,
(Unaudited) 2015 2014 2015 2014
CASH PROVIDED BY (USED IN):
Operating activities
Net earnings (loss) $ (7,524) $ 898,855 $ (10,385) $ 766,861
Add (deduct) items not affecting cash:
Change in fair value of biological assets 24,160 18,884 31,443 (21,422)
Depreciation and amortization 32,449 23,650 64,215 50,293
Stock-based compensation 2,535 11,175 4,215 19,867
Deferred income taxes (7,305) 84,453 (8,284) 40,439
Income tax current 895 7,512 943 9,943
Interest expense and other financing costs 1,062 10,264 2,286 125,149
Loss (gain) on sale of long-term assets 656 398 63 162
Loss (gain) on sale of business (1,008,044) (1,007,576)
Loss (gain) on sale of assets held for sale (5,262) (5,262) (1,736)
Change in fair value of non-designated interest rate swaps (1,214) (1,994) (2,783) (3,104)
Change in fair value of derivative financial instruments 1,853 (26,025) (9,518) 10,609
Impairment of assets (net of reversals) 785 979 785
Increase in pension liability 6,731 2,988 13,371 6,381
Net income taxes paid (54) (1,762) (10,895) (8,615)
Net settlement of financial instruments (23,631) (23,631)
Early repayment premium (76,311) (76,311)
Interest paid (816) (19,258) (1,671) (37,583)
Change in provision for restructuring and other related costs (10,286) 16,597 (15,589) 30,257
Settlement of cash-settled restricted share units (5,332) (5,332)
Other 12,597 (33,520) 12,784 (27,970)
Change in non-cash operating working capital 29,393 (225,927) (20,598) (262,010)
Cash provided by (used in) operating activities $ 74,538 $ (340,911) $ 39,982 $ (409,212)
Financing activities
Dividends paid $ (11,365) $ (5,658) $ (22,804) $ (11,271)
Dividends paid to non-controlling interest (3,017) (24,621)
Net increase (decrease) in long-term debt (698,664) (699,014)
Net drawings (payments) on the credit facility (555,000) (255,000)
Exercise of stock options 784 16,722 2,188 17,672
Repurchase of shares (41,910) (41,910)
Payment of financing fees (50) (3,769) (277) (3,769)
Cash provided by (used in) financing activities $ (52,541) $ (1,249,386) $ (62,803) $ (976,003)
Investing activities
Additions to long-term assets $ (44,019) $ (78,259) $ (70,452) $ (175,931)
Capitalization of interest expense (2,721) (5,504)
Adjustment to sale of business (468)
Proceeds from sale of business 1,647,015 1,647,015
Transaction costs (28,901) (28,901)
Cash associated with divested business (23,011) (23,011)
Proceeds from sale of long-term assets 137 905 2,160 3,255
Proceeds from sale of assets held for sale 5,896 5,896 6,108
Purchase of treasury stock (1,188) (1,188)
Cash provided by (used in) investing activities $ (39,174) $ 1,515,028 $ (63,584) $ 1,422,563
Increase (decrease) in cash and cash equivalents $ (17,177) $ (75,269) $ (86,405) $ 37,348
Net cash and cash equivalents, beginning of period 427,100 470,783 496,328 502,262
Net cash and cash equivalent in held for sale, beginning of period 144,096
Net cash and cash equivalents, end of period $ 409,923 $ 539,610 $ 409,923 $ 539,610
Segmented Financial Information
Three months ended June 30, Six months ended June 30,
2015 2014 2015 2014
Sales
Meat Products Group $ 817,223 $ 825,553 $ 1,593,632 $ 1,530,952
Agribusiness Group 3,553 6,237 7,392 12,185
Bakery Products Group(i) 225,024 567,861
Total sales $ 820,776 $ 1,056,814 $ 1,601,024 $ 2,110,998
Sales from discontinued operations (225,024) (567,861)
Sales from continuing operations $ 820,776 $ 831,790 $ 1,601,024 $ 1,543,137
Earnings (loss) before restructuring and other related costs
and other income
Meat Products Group $ 17,680 $ (15,644) $ 25,558 $ (43,091)
Agribusiness Group 4,109 5,208 6,641 4,862
Bakery Products Group(i) 20,957 47,829
Non-allocated costs (26,519) (10,005) (22,756) (16,937)
Total earnings (loss) before restructuring and other related costs
and other income
$ (4,730) $ 516 $ 9,443 $ (7,337)
Earnings (loss) before restructuring and other related costs and
other income from discontinued operations
(20,957) (47,829)
Earnings (loss) before restructuring and other related costs
and other income from continuing operations
$ (4,730) $ (20,441) $ 9,443 $ (55,166)
Capital expenditures
Meat Products Group $ 36,635 $ 72,809 $ 60,508 $ 140,623
Agribusiness Group 6,642 1,146 8,636 1,969
Bakery Products Group(i) 7,589 17,789
$ 43,277 $ 81,544 $ 69,144 $ 160,381
Depreciation and amortization
Meat Products Group $ 25,665 $ 18,206 $ 50,854 $ 38,187
Agribusiness Group 1,645 904 3,097 2,424
Non-allocated costs(ii) 5,139 4,540 10,264 4,540
Bakery Products Group(i) 5,142
$ 32,449 $ 23,650 $ 64,215 $ 50,293
(i) The prior year results of Canada Bread were included in the comparative
results of the Bakery Products Group.
(ii) Includes depreciation on assets used to service divested business.
As at June 30, 2015 As at June 30, 2014 As at December 31, 2014
Total assets
Meat Products Group $ 1,862,511 $ 1,989,717 $ 1,965,280
Agribusiness Group 172,191 219,558 211,516
Non-allocated assets 726,961 734,327 699,694
$ 2,761,663 $ 2,943,602 $ 2,876,490
Goodwill
Meat Products Group $ 428,236 $ 428,236 $ 428,236
$ 428,236 $ 428,236 $ 428,236

SOURCE Maple Leaf Foods Inc.

Investor Contact: Nick Boland
VP Investor Relations: 905-285-5898
Media Contact: 888-995-5030