HispanicBusiness

Free cash flow was $3.6 million lower than the comparable quarter in fiscal 2012. The decrease was due mainly to lower adjusted net earnings of approximately $4.9 million and higher net capital investment of approximately $0.4 million somewhat offset by deferred financing costs of $2.7 million incurred in the first quarter of fiscal 2012.

Changes in non-cash operating working capital, income taxes payable and interest payable represent quarter-over-quarter movement in current assets such as accounts receivables and inventories, and current liabilities like accounts payable. Movements in these accounts are due mainly to timing in the collection of receivables, receipts of raw sugar and payment of liabilities. Increases or decreases in such accounts do not therefore constitute available cash for distribution. Such increases or decreases are financed from available cash or from the Company's available credit facilities of $200.0 million. Increases or decreases in short-term bank indebtedness are also due to timing issues from the above, and therefore do not constitute available cash for distribution.

Mark-to-market and financial instruments non-cash amount combined impact of negative $1.6 million does not represent cash items as these contracts will be settled when the physical transactions occur, which is the reason for adjustment to free cash flow.

Capital expenditures, net of investment capital, were higher by $0.4 million in the first quarter of 2013 due mainly to timing of capital projects. Investment capital expenditures are added back as these capital projects are not required for the operation of the refineries, but are undertaken due to their substantial operational savings to be realized when these projects are completed. No such projects were undertaken in the first quarter of fiscal 2013.

In the first quarter of fiscal 2012, $9 thousand of third series convertible unsecured subordinated debentures ("Third series debentures") were repurchased under the normal course issuer bid.

In the first quarter of fiscal 2012, the Company issued fifth series convertible unsecured subordinated debentures ("Fifth series debentures") for which an amount of approximately $2.7 million of deferred financing charges was incurred.

The Company declared a quarterly dividend of 9.0 cents per common share, for a total amount of $8.5 million in the first quarter of 2013, while a dividend of 8.5 cents per share was declared in the first quarter of fiscal 2012.

On January 30, 2013, the Board of Directors has authorized and declared a special dividend of 36 cents per share to be paid to Shareholders of record on February 8, 2013, payable on or before February 28, 2013. The declaration of the special dividend, totalling approximately $33.9 million, reflects the distribution of a portion of the previously earned but undistributed free cash flow generated over the five fiscal years from October 2007 to September 2012 which totalled approximately $64.7 million.

Contractual obligations

There are no significant changes in the contractual obligations table disclosed in the Management's Discussion and Analysis of the September 29, 2012 Annual Report.

At December 29, 2012, the operating companies had commitments to purchase a total of 974,000 metric tonnes of raw sugar, of which 178,000 metric tonnes had been priced for a total dollar commitment of $83.9 million.

Capital resources

Lantic has $200.0 million as an authorized line of credit available to finance its operation. This line of credit expires in June 2013. Management is confident that the line of credit can be renewed at competitive market rates. At quarter's end, $60.0 million had been drawn from the working capital line of credit and $12.8 million in cash was also available.