Maple Leaf Restates Tax Liability on Sale of Discontinued Business
Maple Leaf Foods Inc. (TSX: MFI) today announced its intention to restate and refile its 2007 consolidated annual financial statements due to an understatement of future tax expense related to the sale of its animal nutrition business in 2007. The company intends to restate and refile its consolidated annual financial statements for the year ended December 31, 2007, its interim financial statements for the three, six and nine month periods ended March 31, 2008, June 30, 2008 and September 30, 2008 (the "2008 Interim Statements"), respectively, and its related management's discussion and analysis for these periods.
On July 20, 2007, the Company sold its animal nutrition business for gross proceeds of $524.8 million and recognized a gain on the sale of $219.4 million, net of income taxes of $65.1 million. The Company has identified an understatement of future tax expense recognized on this transaction in earnings from discontinued operations of $12.2 million and an understatement of its net future tax liability of the same amount. Consequently, the Company will restate and refile its consolidated annual financial statements for the year ended December 31, 2007 and its 2008 Interim Statements to reflect the increase in tax expense and the increase in its net future tax liability. The impact of reflecting the above restatement results in revised net earnings for the year ended December 31, 2007 of $194.9 million (previously reported net earnings were $207.1 million) and in revised basic and diluted earnings per share ("EPS") of $1.53 and $1.50, respectively (previously reported basic and diluted EPS were $1.63 and $1.59, respectively).
As the sale of the animal nutrition business was reflected in the 2007 financial statements as a discontinued operation, the restatement does not affect earnings from continuing operations in fiscal 2007 or net earnings (loss) in fiscal 2008. Accordingly, earnings from continuing operations previously reported for the fiscal year ended December 31, 2007 and net earnings (loss) for the interim periods in fiscal 2008 remain unchanged.
Maple Leaf Foods Inc. is a leading food processing company, headquartered in Toronto, Canada. The Company employs approximately 23,500 people at its operations across Canada and in the United States, the United Kingdom and Asia. The Company had sales of $5.2 billion in 2007.
SOURCE Maple Leaf Foods Inc.