Lantic has $200.0 million as authorized line of credit available to finance its operations. 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, $105.0 million had been drawn from the working capital facility and $3.6 million in cash and cash equivalents was also available. Inventories were high at quarter end due mainly to the large beet crop harvested and processed in Taber and to the receipt of a raw sugar vessel at the end of the quarter.
Cash requirements for working capital and other capital expenditures are expected to be paid from available credit resources and from funds generated from operations.
During the quarter 20,000 common shares were issued following the exercise of share options by an executive. As at May 1, 2013 a total of 94,110,760 common shares were outstanding.
Future accounting changes
A number of new standards, and amendments to standards and interpretations, are not yet effective and have not been applied in preparing these unaudited condensed consolidated interim financial statements.
IFRS 9 Financial Instruments - This standard will replace IAS 39, Financial Instruments: Recognition and Measurement with a proposed single model for only two classification categories: amortized cost and fair value. The standard is currently required to be adopted for annual periods beginning January 1, 2015. The extent of the impact on the financial statements of the Company has not yet been determined.
IFRS 10 Consolidated Financial Statements - This standard provides additional guidance to determine whether an entity should be included within the consolidated financial statements of the Company. The standard is required to be adopted for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.
IFRS 13 Fair Value Measurement - This standard provides new guidance on fair value measurement and disclosure requirements. This standard is required to be adopted for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.
IAS 19 Employee Benefits - This standard includes the elimination of the option to defer the recognition of gains and losses, enhancing the guidance around measurement of plan assets and defined benefit obligations, streamlining the presentation of changes in assets and liabilities arising from defined benefit plans and the introduction of enhanced disclosures for defined benefit plans. This standard is effective for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.
Risk factors in the Company's business and operations are discussed in the Management's Discussion and Analysis of our Annual Report for the year ended September 29, 2012. This document is available on SEDAR at www.sedar.com or on one of our websites at www.lantic.ca or www.rogerssugar.com.
Industrial volume will be higher in fiscal 2013 as additional volume has been contracted for calendar 2013 with new and existing accounts. In addition the Company was able to contract for one year, starting in the spring of 2013, additional liquid sugar with one large bottler in western Canada. This should increase liquid volume in the second half of the fiscal year. Export volume is forecast to be lower this year as no U.S. special quotas are expected during the year due to large crops in the U.S. and Mexico. Overall the annual sales volume is forecast to be higher than last year.
The Taber sugar beet slicing campaign was completed in early February. We are now estimating total beet sugar production of approximately 122,000 metric tonnes, once the thick juice campaign is completed in the spring of 2013. This production volume is larger than our current sales estimate from Taber which will result in a significant level of inventories being warehoused until next year if other export or domestic sales opportunities do not occur. This will increase distribution costs in the second half of the fiscal year.
A total of 24,000 acres is targeted for planting this season in Taber which is lower than last year due to the large carry-over of beet sugar inventories estimated for this year and sales outlook for fiscal year 2014.
Negotiations for both the Montreal and Vancouver labour contracts, that expired on February 28, 2013, have started during the quarter. Discussions are on-going with the intent of reaching satisfactory agreements over the coming weeks.
Less than half of fiscal 2013's natural gas requirements have been hedged at average prices comparable to those realized in fiscal 2012. Any un-hedged volume should benefit from the current low prices of natural gas and therefore increase adjusted gross margin rates. In addition, some futures positions for fiscal 2014 and 2015 have been taken. These positions are at prices higher than the current market values, but are at the same or better levels than what was achieved in fiscal 2012. We will continue to monitor natural gas market dynamics with the objective of minimizing natural gas costs.
The complete financial statements are available at the following address: http://media3.marketwire.com/docs/RSI_FIS_Q2.pdf.
Mr. Dan Lafrance
SVP Finance, CFO and Secretary
(514) 527-1610 (FAX)
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