Maple Leaf Reports Strong 2004 Third Quarter Financial Results
TORONTO, Oct 27, 2004 (BUSINESS WIRE) -- Maple Leaf Foods Inc. (TSX:MFI) today reported its financial results for the third quarter ended September 30, 2004.
"Our third quarter results demonstrate continued strong momentum in our earnings performance," said Michael McCain, President and Chief Executive Officer. "Our operating income more than doubled in the third quarter, and our net income increased over three fold. We are pleased with the progress in every aspect of our operations, including the contribution of Schneider Foods. We are maintaining a disciplined focus on earnings growth and successfully integrating the Schneider Foods organization into Maple Leaf."
Sales for the third quarter increased to $1.7 billion from $1.3 billion last year, while year-to-date sales increased to $4.6 billion from $3.8 billion last year, due primarily to the inclusion of results from Schneider Foods, which was acquired on April 5, 2004, and high protein demand and prices. Excluding Schneider Foods, sales increased 8% in the third quarter and 3% in the first nine months of 2004.
Net earnings for the third quarter were $27.9 million ($0.24 per share) compared to $7.2 million ($0.05 per share) before $6.9 million ($10.3 million pre-tax) of restructuring costs in the third quarter last year. Year-to-date net earnings were $73.5 million ($0.62 per share) compared to $18.5 million ($0.13 per share) before $11.7 million ($17.7 million pre-tax) of restructuring costs last year.
Operating Review
Comparisons of earnings from operations for the quarter exclude $10.3 million of restructuring costs in the third quarter of 2003 ($17.7 million for the first nine months of 2003). Management believes that this is the most appropriate basis on which to evaluate operating results, as restructuring costs are not representative of ongoing operating earnings. Earnings comparisons are also affected by income related to sale of poultry production quota in the third quarter last year and a gain related to the wind up of a pension plan last year, all of which are more fully explained in previous quarterly reports and the 2003 Annual Financial Statements. The following table reflects earnings from operations by business group before these items, and forms the basis for discussion in this news release.
Earnings from operations before restructuring costs
($ millions) Third Quarter Year-to-Date
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Protein Value Chain 2004 2003 2004 2003
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Meat Products Group 15.3 (9.3) 37.8 (15.6)
Agribusiness Group 25.3 19.1 72.6 45.0
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Total Protein Value Chain 40.6 9.8 110.4 29.4
Bakery Products Group 27.8 16.5 66.1 43.6
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68.4 26.3 176.5 73.0
Sale of production quota - 5.2 4.6 6.3
Pension wind-up gain - 1.3 - 9.5
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$68.4 $32.8 $181.1 $88.8
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Earnings from operations for the third quarter increased to $68.4 million from $26.3 million last year, driven by strong operating performance in both the protein and bakery groups, and the inclusion of Schneider Foods results. Protein Value Chain operating earnings (including Meat and Agribusiness operations) increased substantially to $40.6 million from $9.8 million last year, while Bakery Group earnings increased 68% to $27.8 million from $16.5 million last year. Year-to-date, earnings from operations have more than doubled to $176.5 million.
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 Product Group sales for the third quarter increased to $1.1 billion from $701.6 million last year, while year-to-date sales increased to $2.9 billion from $2.1 billion last year. The increase reflects the contribution of Schneider Foods and increased volumes and sales across other businesses, driven by higher commodity values.
Earnings from operations increased to $15.3 million from an operating loss of $9.3 million last year. Operating earnings for the first nine months were $37.8 million compared to an operating loss of $15.6 million last year. Although processed meats earnings were negatively impacted by higher raw material prices that began to abate towards the end of the quarter, strong results in primary poultry processing, improved operating performance in fresh pork operations, the inclusion of Schneider Foods, and increased earnings from international operations contributed to a very strong quarter. Following the acquisition of the Schneider Foods business, the Meat Products Group is now well balanced between fresh and further processed products, with a good mix of commodity influenced and more stable margin businesses. Over time, the relative contribution from these operations will change, but the overall benefit for the Meat Products Group should be increased margins and earnings stability.
Primary poultry processing continued to be very strong in the third quarter, benefiting from continued higher demand and prices and increased sales of branded fresh chicken. Poultry meat prices began to decline at the end of the quarter, a trend that is expected to continue into the fourth quarter. Improvements in fresh pork operating performance and sales mix contributed to increased margins despite a large decline in the USDA pork processor spread compared to last year. In the processed meats operations, higher input costs for poultry, pork and beef negatively impacted earnings compared to last year, although strong sales of higher value products such as branded sliced meats, bacon and new products such as Maple Leaf Fully Cooked Roasts helped to offset this impact. Four new lines of Ready Cooked Roasts were launched in the third quarter, with eleven varieties of premium pre-cooked meat entrees now in stores. The Company has increased prices to return these businesses to normal margins, although there is often a short-term lag effect as price increases are rolled out.
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 of $230.6 million for the quarter and $686.0 million year-to-date were consistent with last year. Operating earnings increased 32% to $25.3 million from $19.1 million last year, and $72.6 million year-to-date compared to $45.0 million last year. This improvement was driven primarily by a 33% increase in hog prices compared to last year, and strong performance in the rendering business. The Company had effective ownership of approximately 19% of the hogs that it processed at the end of the third quarter. Hog prices have remained unusually strong, although they are now beginning to show signs of the usual seasonal decline. The rising Canadian dollar presents ongoing challenges to all Canadian hog producers to remain competitive with the U.S. industry, and Maple Leaf has, as previously reported, restructured its hog contracts and continues to focus on improving its cost base through production efficiencies. The feed businesses also posted solid results in the third quarter, although marginally lower than last year.
Bakery Products Group (comprised of Maple Leaf's 84.7% ownership in Canada Bread Company, Limited, a leading producer of fresh and frozen par-baked bakery products, and fresh pasta and sauces)
Bakery Products Group sales for the third quarter rose to $332.4 million compared to $321.5 million last year, primarily due to increased sales of fresh bakery products. Year-to-date, sales increased to $966.9 million compared to $943.1 million last year. Earnings from operations for the third quarter increased to $27.8 million from $16.5 million last year, and 52% year-to-date to $66.1 million compared to $43.6 million last year. Last year's results were impacted by a strike at one of the Company's distribution centres, which cost $4.8 million in the third quarter and $7.4 million in the first nine months of 2003. Excluding this impact, operating earnings for both the third quarter and year-to-date increased approximately 30% compared to last year.
The Bakery Group continued to perform extremely well inspite of reduced carbohydrate diets. The Company benefited from a sales mix that favors higher value and nutritious product lines, as consumers shift their buying patterns from white bread products to higher health products such as whole grains. Sales volumes in the third quarter, both in the Bakery Group and the industry, indicate that the negative impact on white bread of low carbohydrate diets may be softening. Against this backdrop, the fresh bakery operations increased earnings, largely through improved sales mix and price increases which offset significant rising input costs. Strong sales of value added products including whole grain, organic and specialty breads, and Dempster's Stays Fresh bread contributed to increased margins for the quarter. A national rollout of Dempster's Healthy Way Organics, including 100% Stone Ground Whole Wheat and 14 Grain breads, was completed in the third quarter, reflecting the Company's continuing investment in whole grain premium bakery products.
The U.K. bakery operations produced strong results in the quarter, from increased volumes in the U.K. and initial sales into Europe. An expansion at the bagel plant in Rotherham, Yorkshire will be commissioned in early 2005 to increase production capacity. The North American frozen par-baked business benefited from increased food service sales in the third quarter, although overall sales and volumes were largely consistent with last year due to a weaker retail market.
In both the fresh and frozen bakery businesses, cost reduction continues to be a significant focus and contributed to results, particularly in Eastern Canada where synergies from recent acquisitions and factory consolidations are being realized. Rising flour, packaging and energy costs continue to place cost pressure on the bakery operations, however both the fresh and frozen businesses continue to manage rising input costs through price increases.
Cash Flow and Financing
Interest expense for the quarter of $22.0 million increased from $17.4 million last year primarily due to increased debt arising from the Schneider Foods acquisition. During the fourth quarter, management anticipates that short-term debt incurred to fund the Schneider Foods acquisition will be refinanced by the issuance of new long-term investment grade debt. Given the Company's strong operating results for the year, no decision has been made to date whether to pursue an equity issue.
Increased earnings and reduced investment in working capital resulted in a significant increase in cash flow from operating activities to $45.5 million from $30.5 million last year. Year to date, cash flow from operating activities improved significantly to $94.9 million. This represented a $130 million improvement over the prior year, resulting from the substantial improvement in operating earnings, a $39 million improvement in working capital, and an increase in future taxes. Capital expenditures for the quarter increased to $45.6 million, reflecting the Company's investment in major capital projects such as the expanded bagel plant in the U.K. and a new world class feed mill in Moncton, New Brunswick.
Other Matters
The Company declared a dividend of $0.04 per share payable December 31, 2004 to shareholders of record December 10, 2004.
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 23,000 people at its operations across Canada and in the United States, Europe and Asia.
An investor presentation related to the Company's third 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 2:30 p.m. (EST) on October 27, 2004 to review Maple Leaf Foods' financial results for the third quarter ended September 30, 2004. To participate in the call, please dial in to 1-416-405-9328 or 800-387-6216. For those unable to participate, playback will be made available an hour after the event at 1-416-695-5800 / 800- 408-3053 (Pass code 3104258#).
A webcast presentation of the third quarter financial results will be available at http://firstcallevents.com/service/aiwz4O4882369qfl2.html at 2:30 p.m. EST and via a link on the Company's website at www.mapleleaf.com http://www.mapleleaf.com. An archived replay of the webcast will be available following the call at each of the above links.
This release contains forward-looking statements and information, which may include statements concerning the company's outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. These risks and uncertainties include availability and prices of livestock, raw materials and supplies, livestock costs, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, adverse results from ongoing litigation and actions of domestic and foreign governments. Maple Leaf assumes no obligation to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein do not materialize. Refer to the Company's annual report, management information circular, annual information form and other filings with the Ontario Securities Commission and Toronto Stock Exchange for further information on risks and uncertainties that could cause actual results to differ materially from forward-looking statements.
Maple Leaf Foods Inc. Notes to Consolidated Financial Statements (For the quarters ended September 30, 2004 and September 30, 2003) (Tabular amounts in thousands of Canadian dollars except share amounts)
1. Significant Accounting Policies
The unaudited interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2003. These unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles using the same accounting policies as were applied in the consolidated financial statements for the year ended December 31, 2003.
a) Hedging Relationships
As discussed in note 2(m)(i) of the annual consolidated financial statements for the year ended December 31, 2003, the Company is in compliance with CICA Accounting Guideline 13 relating to hedging.
b) Accounting for Asset Retirement Obligations
The application of new accounting standard, Section 3110, "Accounting for Asset Retirement Obligations" as disclosed in note 2(m)(ii) of the annual consolidated financial statements for the year ended December 31, 2003, did not have a material impact on the financial statements of the Company.
c) Customer Rebates and Promotional Allowances
A new accounting standard, EIC-144,became applicable in the third quarter of 2004. This new standard which generally requires that rebates and other promotional allowances received from a vendor be accounted for as a reduction of the cost of product acquired, has no material impact on the Company's financial statements. The Company is reviewing its income statement classification of certain sales incentives which it pays to its customers, including rebates and promotional programs, certain of which are classified as cost of sales.
d) Comparative Figures
Certain 2003 comparative figures have been reclassified to conform with the financial statement presentation adopted in 2004.
2. Accounts Receivable
Under revolving securitization programs, the Company has sold, with limited recourse, certain of its trade accounts receivable to financial institutions. The Company retains servicing responsibilities and assumes limited recourse obligations for delinquent receivables. At September 30, 2004, trade accounts receivable amounting to $194.3 million (September 30, 2003: $179.2 million; December 31, 2003: $186.8 million) had been sold under these programs.
3. Restructuring Costs
During the first quarter of 2003, the Company recorded $7.4 million in restructuring costs ($4.8 million, net of tax), relating to plant closures and operational restructuring in the Bakery Products Group.
During the third quarter of 2003, the Company recorded $10.3 million in restructuring costs ($6.9 million, net of tax), relating to plant closures and operational restructuring of several businesses, primarily consolidation of feed mill operations in the Maritimes and reorganization of Atlantic Canada meat processing operations.
4. Other Income (Expense)
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Quarter Ended Nine months Ended
September 30, September 30,
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2004 2003 2004 2003
Income from associated companies $ 211 $ 68 $ 699 $ 108
Gain (loss) on sale of property and
equipment (128) 236 1,112 87
Rental income 84 79 280 235
Gain on disposal of investments 492 - 512 -
Gain (loss) on real estate
Operations (49) 26 (196) 542
Advisor, legal and accounting costs - (1,549) - (1,549)
of bakery re-organization
Other 112 48 112 87
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$ 722 $(1,092) $ 2,519 $ (490)
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5. Earnings Per Share
The following table sets forth the calculation of basic and diluted
earnings per share.
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Quarter Ended Nine months Ended
September 30, September 30,
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2004 2003 2004 2003
Numerator:
Net earnings 27,934 299 73,519 8,080
Convertible debenture charge (1,223) (1,215) (3,659) (3,637)
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Earnings available to common
shareholders $ 26,711 $ (916) $ 69,860 $ 4,443
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Weighted average number of shares
(millions) 113.3 113.1 113.2 113.1
Earnings per share (basic) $0.24 ($0.01) $0.62 $0.04
Earnings per share (diluted) $0.23 ($0.01) $0.61 $0.04
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6. Stock-based Compensation
As disclosed in note 12 of the annual consolidated financial statements for the year ended December 31, 2003, the Company elected to early-adopt the new "Stock-based Compensation and Other Stock-based Payments" accounting rules on a prospective basis. The stock-based compensation charge to earnings was $1.0 million during the quarter ended September 30, 2004 and $2.5 million for the year to date. For the first 9 months of 2003, the impact of stock compensation charges to earnings was not significant.
However, the effect of stock option awards granted in 2002 (2,503,500 at a weighted average price per share of $14.36), had they been charged to earnings on a fair value basis, would have been an additional expense in the current quarter of $0.9 million (2003: $0.9 million) and year to date of $2.6 million (2003: $2.6 million year to date) with a related reduction to basic earnings per common share in the current quarter of $0.01 (2003: $0.01) and 2004 year to date of $0.03 (2003: $0.02 year-to-date).
During the third quarter of 2004, the Company granted 1,265,250 stock options at a weighted average price per share of $13.21 (2003: 2,438,000 stock options granted at a weighted average price per share of $10.30). The fair value of the total options issued in a quarter is determined using the Black-Scholes option pricing model with the following weighted average assumptions:
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Quarter Ended September 30, 2004
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Expected option life 4.2 years
Risk-free interest rate 3.9%
Expected annual volatility 33.5%
Dividend yield 1.2%
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The estimated fair value of the options issued during the third quarter of 2004 was $4.1 million (2003: $6.2 million). This value is amortized to income over the vesting period of the related options.
In September 2004, the Company granted 776,375 restricted stock units ("RSUs") to its employees under the Company's Share Incentive Plan. Each RSU entitles the holder to receive one common share in the capital of the Company at specified future dates. The issuance of these shares is dependent upon the achievement of specified performance targets relative to an index and continued employment with the Company at the end of the third and fifth years.
The fair value of the total RSUs granted in a quarter is determined using a present value calculation with an assumed forfeiture rate. The fair value of the RSUs on the date of grant is $7.6 million which is amortized to income on a pro-rata basis over the vesting periods of the related RSUs. The amortization of the fair value of the RSUs had no material impact on earnings in the quarter.
7. Pensions
During the quarter, the Company recorded income of $5.8 million related to net benefit plan income including post-retirement benefit costs (2003: $0.5 million). For the first nine months of 2004, the Company recorded $6.8 million in net benefit plan income (2003: $6.7 million).
8. Acquisitions
On April 5, 2004 the Company completed the acquisition of Schneider Corporation ("Schneider Foods") for $499 million.
The company has not yet completed the determination of the fair values of the individual assets and liabilities acquired, or its restructuring and integration plans for the operations acquired. As at September 30, 2004, the only significant items that have been assigned preliminary fair values are accrued pension benefit liabilities and accrued post-retirement benefit liabilities. Accordingly, the allocation of the purchase costs to the assets and liabilities acquired is preliminary and will change. Goodwill resulting from the above transaction is included in the total assets of the Meat Products Group.
Details of net assets acquired and other purchase adjustments made in
2004 are as follows:
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2004
Net working capital $ 75,880
Investments 18,789
Property and equipment 182,339
Goodwill 288,164
Other intangibles 36,712
Indebtedness - short term (32,063)
Long-term debt (101,067)
Future income taxes 23,235
Accrued pension benefit liabilities (78,200)
Accrued post-retirement benefit liabilities (35,484)
Minority interest (1,737)
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Purchase Cost $ 376,568
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Consideration
Cash $ 380,899
Less: Previously accrued charges (4,331)
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$ 376,568
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In addition to the assets and liabilities acquired, the Company has also assumed operating lease, rent and other commitments that require minimum aggregate payments of approximately $23 million in the next four fiscal years and approximately $31 million thereafter.
The acquisition was funded by a combination of existing unused credit facilities, a new short-term bank facility and the assumption of existing debt of Schneider Foods.
The Company entered into a Credit Agreement with a syndicate of banks on March 1, 2004. The amount of the syndicated facility provides for an amount up to $205 million for the purpose of financing part of the purchase price and any required repayments of existing Schneider indebtedness. The facility has a maturity date of April 5, 2005 and bears interest based on bankers' acceptance rates for Canadian dollar loans and LIBOR for U.S. dollar loans.
In addition to the bank financing, the Company has entered into a Financing Agreement with The Ontario Teachers' Pension Plan Board (OTPPB). This agreement provides the Company with a standby commitment from OTPPB to purchase, at the Company's option, up to $150 million of treasury shares at any time until its expiry on April 15, 2005. Pricing of the shares under this arrangement would be at a 6% discount to the market-trading price of the Company's common shares prior to an issue.
9. Derivatives
In the ordinary course of business, the Company enters into derivative financial instruments to reduce underlying fair value and cash flow risks associated with foreign currency, interest rates and commodity prices. If the Company had not entered into these contracts, operating earnings for the third quarter 2004 would have been higher by $7.7 million (year-to-date $10.8 million) and interest expense for the third quarter 2004 would have been lower by $4.6 million (year-to-date $12.6 million).
The new short-term bank facilities used to finance the Schneider Foods acquisition (see Note 8) bear interest at floating market rates. The Company plans to re-finance these bank facilities with new long term debt and possibly equity financing. In the second quarter the Company entered into a series of interest rate and cross currency swaps to hedge the interest rate on the anticipated new debt issue. The swaps were issued for notional amounts of $50.0 million and US$185.0 million, have terms of seven and ten years and fixed interest rates that range between 6.08% and 6.75%. As at September 30, 2004 these swaps had a market value loss of $13.4 million.
10. Supplemental Information
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Quarter Ended Nine months Ended
September 30, September 30,
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2004 2004
Cash taxes paid $ 9,028 $ 30,446
Cash interest paid 16,203 56,614
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Maple Leaf Foods Inc.
Consolidated Balance Sheets
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In thousands of Canadian dollars As at As at
September 30, December 31
2004 2003 2003
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(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 46,726 $ 99,903 $ 38,908
Accounts receivable (Note 2) 337,784 273,161 242,306
Inventories 390,181 265,228 259,758
Future tax asset-current 5,292 12,666 4,854
Prepaid expenses and other assets 17,179 18,363 9,355
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797,162 669,321 555,181
Investments in associated companies 78,671 67,474 58,189
Property and equipment 992,936 781,342 802,332
Other long-term assets 212,485 180,261 171,262
Future tax asset non-current 28,965 29,677 29,906
Goodwill and other intangible assets 855,020 522,113 531,851
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$ 2,965,239 $ 2,250,188 $ 2,148,721
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
charges $ 606,296 $ 514,970 $ 501,997
Income and other taxes payable 12,244 13,732 12,212
Current portion of long-term debt 116,110 35,925 4,959
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734,650 564,627 519,168
Long-term debt 1,144,311 822,226 730,627
Future tax liability 42,813 43,787 50,397
Other long-term liabilities 162,587 37,414 35,274
Minority interest 79,995 66,269 70,068
Shareholders' equity: 800,883 715,865 743,187
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$ 2,965,239 $ 2,250,188 $ 2,148,721
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The accompanying notes to the consolidated financial statements are
an integral part of this statement.
Maple Leaf Foods Inc.
Consolidated Statements of Earnings
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In thousands of Canadian dollars, Quarter ended Nine months ended
except per share amounts September 30, September 30,
2004 2003 2004 2003
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(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Sales $1,698,508 $1,252,982 $4,582,729 $3,768,446
Earnings from operations
before restructuring costs 68,405 32,815 181,093 88,842
Restructuring costs (Note 3) - (10,310) - (17,732)
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Earnings from operations 68,405 22,505 181,093 71,110
Other income (expense) (Note 4) 722 (1,092) 2,519 (490)
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Earnings before interest and
income taxes 69,127 21,413 183,612 70,620
Interest expense 22,046 17,412 60,059 50,303
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Earnings before income taxes 47,081 4,001 123,553 20,317
Income taxes 16,131 1,594 42,820 7,288
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Earnings before minority
interest 30,950 2,407 80,733 13,029
Minority interest 3,016 2,108 7,214 4,949
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Net earnings for the period $ 27,934 $ 299 $ 73,519 $ 8,080
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Earnings per share (basic)
(Note 5) $ 0.24 $ (0.01) $ 0.62 $ 0.04
Earnings per share (diluted)
(Note 5) $ 0.23 $ (0.01) $ 0.61 $ 0.04
Dividends per share declared 0.04 0.04 0.12 0.12
Weighted average number of
shares (millions) 113.3 113.1 113.2 113.1
The accompanying notes to the consolidated financial statements
are an integral part of this statement.
Maple Leaf Foods Inc.
Consolidated Statements of Retained Earnings
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In thousands of Canadian dollars,
except per share amounts. Nine Months Ending September 30,
2004 2003
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(Unaudited) (Unaudited)
Retained earnings, beginning of period $ 74,982 $ 63,758
Net earnings for the period 73,519 8,080
Dividends declared ($0.12 per share;
2003: $0.12 per share) (13,589) (13,567)
Convertible debenture charge (3,659) (3,637)
Premium on repurchase of share capital - (899)
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Retained earnings, end of period $ 131,253 $ 53,735
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The accompanying notes to the consolidated financial statements are
an integral part of this statement.
Maple Leaf Foods Inc.
Consolidated Statements of Cash Flows
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In thousands of Canadian dollars Quarter ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
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CASH PROVIDED BY
(USED IN): (Unaudited)(Unaudited)(Unaudited)(Unaudited)
Operating activities
Net earnings for the
period $ 27,934 $ 299 $ 73,519 $ 8,080
Add (deduct) items not
affecting cash:
Depreciation and
amortization 30,177 25,426 91,264 74,768
Stock based compensation
(Note 6) 1,040 289 2,505 350
Minority interest 3,016 2,108 7,214 4,949
Future income taxes 5,199 (12,974) 17,036 (11,600)
Increase in pension asset
(Note 7) (13,935) (3,001) (25,493) (17,234)
Undistributed earnings of
associated companies (1,799) (260) (3,304) (293)
(Gain) loss on sale of
property and equipment 128 (236) (1,112) (87)
Gain on sale of investments (492) - (512) -
Other (8,892) 2,061 (10,642) (4,962)
Change in other long-term
receivables 274 (38) (5,525) 58
Change in non-cash operating
working capital 2,818 16,819 (50,064) (88,669)
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45,468 30,493 94,886 (34,640)
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Financing activities
Dividends paid (4,532) (4,526) (13,589) (13,567)
Dividends paid to minority
interest (255) (358) (722) (1,429)
Increase in long-term debt 24,589 61,112 447,484 186,635
Decrease in long-term debt (38,967) (2,033) (42,524) (12,822)
Convertible debenture
interest paid (1,370) (1,370) (4,109) (4,109)
Increase in share capital 542 626 1,213 2,772
Shares repurchased for
cancellation - - - (1,829)
Other 460 465 1,384 1,393
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(19,533) 53,916 389,137 157,044
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Investing activities
Additions to property
and equipment (45,615) (35,374) (108,108) (92,899)
Proceeds from sale of
property and equipment 210 704 9,066 1,216
Purchase of net assets of
businesses (Note 8) (10,338) (29,417) (380,899) (80,417)
Change in other investments,
net 2,270 1,209 2,554 (7,684)
Other (334) 435 1,182 417
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(53,807) (62,443) (476,205) (179,367)
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Increase (decrease) in cash
and cash equivalents (27,872) 21,966 7,818 (56,963)
Cash and cash equivalents,
beginning of period 74,598 77,937 38,908 156,866
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Cash and cash equivalents,
end of period 46,726 99,903 46,726 99,903
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The accompanying notes to the consolidated financial statements are
an integral part of this statement
Maple Leaf Foods Inc.
Segmented Financial Information
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In thousands of Canadian dollars Quarter ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
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(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Sales
Meat Products Group $1,135,501 $ 701,631 $2,929,806 $2,141,288
Agribusiness Group 230,559 229,873 686,001 684,058
Bakery Products Group 332,448 321,478 966,922 943,100
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$1,698,508 $1,252,982 $4,582,729 $3,768,446
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Earnings from operations,
before restructuring
costs (1)
Meat Products Group $ 15,246 $ (8,003) $ 37,833 $ (6,061)
Agribusiness Group 25,331 24,269 77,151 51,303
Bakery Products Group 27,828 16,549 66,109 43,600
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$ 68,405 $ 32,815 $ 181,093 $ 88,842
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Capital expenditures
Meat Products Group $ 10,445 $ 8,664 $ 36,361 $ 29,182
Agribusiness Group 15,043 6,549 25,611 22,966
Bakery Products Group 20,127 20,161 46,136 40,751
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$ 45,615 $35,374 $108,108 $ 92,899
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Depreciation and amortization
Meat Products Group $ 13,957 $ 10,438 $ 43,396 $ 30,781
Agribusiness Group 5,585 4,764 15,839 13,891
Bakery Products Group 10,635 10,224 32,029 30,096
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$ 30,177 $ 25,426 $ 91,264 $ 74,768
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In thousands of Canadian dollars, As at As at
September 30, December 31
2004 2003 2003
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(Unaudited) (Unaudited)
Total assets
Meat Products Group $ 1,435,818 $ 707,145 $ 666,489
Agribusiness Group 606,824 564,090 555,693
Bakery Products Group 708,472 718,812 716,463
Non-allocated assets 214,125 260,141 210,076
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$ 2,965,239 $ 2,250,188 $ 2,148,721
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The accompanying notes to the consolidated financial statements are
an integral part of this statement.
(1) Prior to 2004, the Company included the cost of production contracts with hog producers in the Meat Products Group. Management considers it more appropriate to include these impacts in the Agribusiness Group operating results. Therefore, 2003 segmented operating earnings before restructuring costs have been restated to reflect this change in presentation and make them comparable with 2004.
SOURCE: Maple Leaf Foods Inc.
Maple Leaf Foods Inc. Lynda Kuhn Vice-President, Public & Investor Relations (416) 926-2026 www.mapleleaf.com