Looking Forward
The Company is cautiously optimistic as it enters 2013, after a strong finish to 2012. Sales volumes improved in the fourth quarter and will remain the prime focus for the organization throughout 2013 as it strives to move ever closer to its billion dollar revenue goal. Raw material cost stability was a feature of 2012. With the initial cost trend in 2013 pointing upward, the Company will be challenged to protect the spread between selling prices and raw material costs. Fortunately, the organization's margins are partly insulated from erosion in that approximately two-thirds of the Company's revenues are subject to selling price indexing agreements whereby selling prices to customers are adjusted via formula to changes in raw material costs.
The Company remains committed to its internal capital investment program. Significant effort was devoted in 2012 to add capacity for the future and expansions initiated in 2012 are scheduled for completion in the first half of 2013, providing a foundation for growth. With nearly $70 million expended on capital projects in 2012, a similar amount is also planned for 2013. This will include the completion of the Company's expansion of the Vaudreuil lidding facility, a building expansion at the Winnipeg modified atmosphere packaging plant, as well as extrusion equipment additions at the rigid container, modified atmosphere packaging, specialty film and lidding sites. However, as this new capacity becomes available, costs may temporarily increase as product development expenses peak and capacity is under-utilized as sales are added on a gradual but steady basis. Margins, however, are not expected to deviate from historical levels by more than a few percentage points during that period. In the year ahead, the Company will also continue to seek out acquisition opportunities in its core competencies of food and health-care packaging. With Winpak's extremely solid financial footing, it has the resources necessary to complete a significant acquisition while remaining strongly committed to the organic growth capital investment plan.
Winpak Ltd.
Interim Condensed Consolidated Financial Statements
Fourth Quarter Ended: December 30, 2012
These interim condensed consolidated financial statements have not been audited or reviewed by the Company's independent external auditors, PricewaterhouseCoopers LLP. For a complete set of notes to the condensed consolidated financial statements, refer to www.sedar.com or the Company's website, www.winpak.com.
Winpak Ltd.Condensed Consolidated Balance Sheets(thousands of US dollars) (unaudited) December 30 December 25 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------AssetsCurrent assets: Cash and cash equivalents 133,303 126,879 Trade and other receivables 86,797 83,935 Income taxes receivable 389 33 Inventories 90,246 78,018 Prepaid expenses 3,864 2,769 Derivative financial instruments 288 242 ------------------------------- 314,887 291,876Non-current assets: Property, plant and equipment 301,678 256,938 Intangible assets 14,551 15,076 Deferred tax assets 3,448 3,729 ------------------------------- 319,677 275,743 -------------------------------Total assets 634,564 567,619 -------------------------------Equity and LiabilitiesCurrent liabilities: Trade payables and other liabilities 59,184 59,294 Provisions 427 592 Income taxes payable 5,417 4,988 Derivative financial instruments - 836 ------------------------------- 65,028 65,710Non-current liabilities: Employee benefit plan liabilities 14,511 12,504 Deferred income 11,475 10,243 Provisions 7,399 8,423 Deferred tax liabilities 20,063 17,116 ------------------------------- 53,448 48,286 -------------------------------Total liabilities 118,476 113,996 -------------------------------Equity: Share capital 29,195 29,195 Reserves 250 (426) Retained earnings 470,925 409,008 -------------------------------Total equity attributable to equity holders of the Company 500,370 437,777Non-controlling interests 15,718 15,846 -------------------------------Total equity 516,088 453,623 -------------------------------Total equity and liabilities 634,564 567,619 -------------------------------Winpak Ltd.Condensed Consolidated Statements of Income(thousands of US dollars, except per share amounts) (unaudited) Quarter Ended Year Ended ---------------------------------------------------- ---------------------------------------------------- December 30 December 25 December 30 December 25 2012 2011 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue 173,226 171,516 670,078 652,063Cost of sales (118,120) (121,283) (471,050) (464,299) ----------------------------------------------------Gross profit 55,106 50,233 199,028 187,764Sales, marketing and distribution expenses (13,409) (13,312) (55,550) (53,043)General and administrative expenses (6,197) (6,714) (27,199) (26,345)Research and technical expenses (3,735) (3,006) (13,933) (12,606)Pre-production expenses (113) - (650) (240)Other income (expenses) (167) 404 1,796 (520) ----------------------------------------------------Income from operations 31,485 27,605 103,492 95,010Finance income 1,202 1,306 4,715 4,417Finance expense (917) (1,011) (3,704) (3,865) ----------------------------------------------------Income before income taxes 31,770 27,900 104,503 95,562Income tax expense (9,532) (9,219) (31,692) (30,653) ----------------------------------------------------Net income for the period 22,238 18,681 72,811 64,909 ----------------------------------------------------Attributable to: Equity holders of the Company 22,335 18,486 72,376 63,783 Non-controlling interests (97) 195 435 1,126 ---------------------------------------------------- 22,238 18,681 72,811 64,909 ----------------------------------------------------Basic and fully diluted earnings per share - cents 34 28 111 98 ----------------------------------------------------Condensed Consolidated Statements of Comprehensive Income(thousands of US dollars) (unaudited) Quarter Ended Year Ended ---------------------------------------------------- ---------------------------------------------------- December 30 December 25 December 30 December 25 2012 2011 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Net income for the period 22,238 18,681 72,811 64,909 ----------------------------------------------------Cash flow hedge (losses) gains recognized (113) (125) 498 (167)Cash flow hedge (gains) losses transferred to the statement of income (27) 162 (173) (996)Cash flow hedge (gains) losses transferred to property, plant and equipment (10) (60) 557 (60)Actuarial losses on employee benefit plans (3,944) (11,771) (3,944) (11,771)Income tax relating to applicable components of other comprehensive income 1,334 3,640 1,089 3,990 ----------------------------------------------------Other comprehensive loss for the period - net of income tax (2,760) (8,154) (1,973) (9,004) ----------------------------------------------------Comprehensive income for the period 19,478 10,527 70,838 55,905 ----------------------------------------------------Attributable to: Equity holders of the Company 19,575 10,332 70,403 54,779 Non-controlling interests (97) 195 435 1,126 ---------------------------------------------------- 19,478 10,527 70,838 55,905 ----------------------------------------------------Winpak Ltd.Condensed Consolidated Statements of Changes in Equity(thousands of US dollars) (unaudited) Attributable to equity holders of the Company ------------------------------------- ------------------------------------- Non- Share Retained controlling Total capital Reserves earnings Total interests equity--------------------------------------------------------------------------------------------------------------------------------------------------------Balance at December 27, 2010 29,195 441 361,128 390,764 16,533 407,297 ---------------------------------------------------------- Comprehensive (loss) income for the period Cash flow hedge losses, net of tax - (109) - (109) - (109) Cash flow hedge gains transferred to the statement of income, net of tax - (714) - (714) - (714) Cash flow hedge gains transferred to property, plant and equipment - (44) - (44) - (44) Actuarial losses on employee benefit plans, net of tax - - (8,137) (8,137) - (8,137) ---------------------------------------------------------- Other comprehensive loss - (867) (8,137) (9,004) - (9,004) Net income for the period - - 63,783 63,783 1,126 64,909 ---------------------------------------------------------- Comprehensive (loss) income for the period - (867) 55,646 54,779 1,126 55,905 ---------------------------------------------------------- Preferred share redemption - - - - (980) (980) Dividends - - (7,766) (7,766) (833) (8,599) ----------------------------------------------------------Balance at December 25, 2011 29,195 (426) 409,008 437,777 15,846 453,623 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Balance at December 26, 2011 29,195 (426) 409,008 437,777 15,846 453,623 ---------------------------------------------------------- Comprehensive income for the period Cash flow hedge gains, net of tax - 252 - 252 - 252 Cash flow hedge gains transferred to the statement of income, net of tax - (133) - (133) - (133) Cash flow hedge losses transferred to property, plant and equipment - 557 - 557 - 557 Actuarial losses on employee benefit plans, net of tax - - (2,649) (2,649) - (2,649) ---------------------------------------------------------- Other comprehensive income (loss) - 676 (2,649) (1,973) - (1,973) Net income for the period - - 72,376 72,376 435 72,811 ---------------------------------------------------------- Comprehensive income for the period - 676 69,727 70,403 435 70,838 ---------------------------------------------------------- Dividends - - (7,810) (7,810) (563) (8,373) ----------------------------------------------------------Balance at December 30, 2012 29,195 250 470,925 500,370 15,718 516,088 ----------------------------------------------------------Winpak Ltd.Condensed Consolidated Statements of Cash Flows(thousands of US dollars) (unaudited) Quarter Ended Year Ended ---------------------------------------------------- ---------------------------------------------------- December 30 December 25 December 30 December 25 2012 2011 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Cash provided by (used in):Operating activities: Net income for the period 22,238 18,681 72,811 64,909 Items not involving cash: Depreciation 6,687 7,372 26,151 26,789 Amortization - deferred income (304) (308) (1,215) (1,223) Amortization - intangible assets 108 514 1,261 2,049 Employee defined benefit plan expenses 535 495 3,331 2,928 Net finance income (285) (295) (1,011) (552) Income tax expense 9,532 9,219 31,692 30,653 Other (514) (353) (1,478) (1,433) ---------------------------------------------------- Cash flow from operating activities before the following 37,997 35,325 131,542 124,120 Change in working capital: Trade and other receivables 498 171 (2,862) (6,676) Inventories (2,721) 10,059 (12,228) (1,943) Prepaid expenses (471) 1,039 (1,095) (485) Trade payables and other liabilities 3,662 3,901 (140) 6,756 Provisions (327) (55) (1,326) 795 Employee defined benefit plan payments (1,038) (2,153) (4,671) (5,148) Income tax paid (5,176) (5,892) (25,756) (22,347) Interest received 107 104 474 309 Interest paid (1) (3) (31) (20) ---------------------------------------------------- Net cash from operating activities 32,530 42,496 83,907 95,361 ----------------------------------------------------Investing activities: Acquisition of property, plant and equipment - net (17,449) (21,089) (68,412) (48,906) Acquisition of intangible assets (58) (176) (745) (462) ---------------------------------------------------- (17,507) (21,265) (69,157) (49,368) ----------------------------------------------------Financing activities: Dividends paid (1,983) (1,894) (7,763) (7,789) Change in non- controlling interests in subsidiary - - (563) (1,813) ---------------------------------------------------- (1,983) (1,894) (8,326) (9,602) ----------------------------------------------------Change in cash and cash equivalents 13,040 19,337 6,424 36,391Cash and cash equivalents, beginning of period 120,263 107,542 126,879 90,488 ----------------------------------------------------Cash and cash equivalents, end of period 133,303 126,879 133,303 126,879 ----------------------------------------------------
Contacts:
Winpak Ltd.
K.P. Kuchma
Vice President and CFO
(204) 831-2254
Winpak Ltd.
B.J. Berry
President and CEO
(204) 831-2216
www.winpak.com
