REPORT TO SHAREHOLDERS
Records are meant to be broken! Each year, for the past four years, Winpak’s net income has aggressively surpassed the prior year’s standings. For
2011, net income attributable to common shareholders of $63.8 million or 98 cents per share, outpaced 2010’s performance by 15.3 percent or 13
cents per share. Of further distinction, quarterly earnings per share for each of the past 15 consecutive quarters have exceeded the preceding year’s
achievements for the same timeframes. The Company’s enviable pro(cid:2) t (cid:2) gures were supported by strong revenue in 2011 of $652.1 million, which
favorably outdistanced 2010 by $72.6 million or 12.5 percent.
There is a new buzz at the Company originating from the resolve to see Winpak’s revenue escalate to one billion dollars by the year 2015. The
Corporation’s new battle cry is the “Billion Dollar Commitment” and its acronym “BDC” is entrenched in the spirit and work ethic of the entire Winpak
team. This enthusiasm and dedication to the cause is backed by Winpak’s Board of Directors having endorsed a capital program, which will provide plant
expansions and state-of-the-art manufacturing equipment, allowing Winpak to remain at the forefront of technical breakthroughs. Exciting events continue
to happen in all areas of Winpak’s business.
One of the more enterprising undertakings in 2011 was the construction of a new 260,000 square foot building in Sauk Village, Illinois. This venture is
nearing completion and will be in operation in the second quarter of 2012. Said facility will house additional extrusion and thermoforming lines producing
high-barrier sheet materials that will greatly extend the shelf-life of perishable foods. As the barrier properties of rigid plastic packaging materials become
more sophisticated, their popularity as alternatives to glass jars and metal cans will yield even more rewarding growth opportunities for Winpak. This
capital project will satisfy customers’ intensi(cid:2) ed demands for this type of packaging and advance the Company’s ongoing sales in this burgeoning market.
Long-term plans call for doubling the size of this plant and suf(cid:2) cient land has been set aside for this eventuality.
Winpak’s range of shrink bags continues to garner rave reviews in the marketplace. Supplementary extrusion and bag-making capacity was installed in
2011 at the Company’s Georgia-based specialty (cid:2) lms plant in order to satisfy customer requests for this product offering. When this facility was enlarged
in 2010, space was allocated for future growth. However, based on the fact that this specialty item has been so well received, projections dictate that
future expansion plans may need to be pushed forward. Success of the shrink bag product line has further enabled the Company to offer a one-stop shop
for its customers. Hence, major meat and cheese processing plants are consistently favoring Winpak as a reliable supplier for more of their packaging
needs. Outside the meat and cheese industries, speci(cid:2) c equipment acquired for Winpak’s Georgia operations in 2011 promoted revenue growth in liquid
and other unique packaging applications.
The Company’s promising entry into the pharmaceutical and health-care markets continues to gather steam. Winpak’s own and licensed proprietary
technology is the springboard for providing new business opportunities. To keep pace with the appeal for novel products in these markets, coupled with
the ongoing success of the die-cut lid business, a major extrusion/coating/laminating line has been speci(cid:2) ed and is slated for installation at the Quebec
plant in 2012. To house this new equipment, the Quebec facility will be expanded. Plans are also in the works that will see the start-up of a converting
operation outside the borders of Canada and the United States in 2012.
Revenue from Winpak’s modi(cid:2) ed atmosphere packaging materials is gaining impressive momentum at some of North America’s largest meat and cheese
processing operations. Success is attributed to excellent quality products, a dynamic sales force and a comprehensive product range, thus attractively
affording customers the ability to source all of their modi(cid:2) ed atmosphere packaging needs from one supplier. To further capitalize on this strength, a new
production line will be installed in 2012 at the Company’s Winnipeg location. An extra 75,000 square feet will be built onto the plant to accommodate
other auxiliary capacity needs. With the ever-surging demand for complex, high-barrier packaging materials, the future bodes well for Winpak’s modi(cid:2) ed
atmosphere packaging product offerings.
The goal for Winpak’s machinery operations is to design and manufacture equipment that will utilize the Company’s (cid:3) exible and rigid packaging materials
thus continually advancing its commitment to promote cross-selling. This approach has generated success, not only in the Company’s more traditional
food end-use applications, but more recently in-roads have also been made for packaging material revenues to health-care and industrial end-use product
markets. These persistent efforts have reaped dividends in that 2011 was a banner year for both machinery and system revenue. Based on these results,
this winning formula will be replicated in 2012.
Winpak’s business venture with Sojitz Corporation of Japan to produce biaxially oriented nylon logged a good sales year in 2011. By diligently improving
ef(cid:2) ciency on existing production lines, output was increased. Even with this added bene(cid:2) t, it is anticipated that due to the intensi(cid:2) ed popularity for
biaxially-oriented nylon, the Company’s two primary products lines will be entirely sold out by the end of 2012. The Company’s superior biaxially-oriented
nylon materials continue to out-perform the competition. This subsidiary is now in a position where the demand for its product is beginning to exceed
supply. It will now focus even more diligently on weeding out less lucrative business and, hence, maximize pro(cid:2) ts.
Winpak had a most noteworthy year in 2011 and this further af(cid:2) rms its established track record for attaining its goals. The business plan is (cid:2) rmly in place
for Winpak to obtain its Billion Dollar Commitment in the year 2015. This initiative has been supported by the Corporation’s Board of Directors, capital
has been earmarked to provide the required capacity for growth and with the determination and winning spirit of the entire Winpak team, a foundation has
been solidi(cid:2) ed to ensure success. This is signi(cid:2) cantly enhanced by the enormous opportunities that exist for packaging food and health-care products
reliant on the type of proprietary and sophisticated materials manufactured by Winpak. Winpak’s future is assured and de(cid:2) nitely looks most promising
for both revenue and pro(cid:2) ts.
B.J. Berry
President and Chief Executive Of(cid:2) cer
Winnipeg, Canada
February 16, 2012
1
REVIEW
(Values expressed in US dollars)
Operating results ($ million except earnings per share)
Revenue
Income from operations
EBITDA (2)
Net income attributable to equity holders of the Company
Earnings per share (cents)
Investments and assets ($ million)
Investments in property, plant and equipment
Total assets
Financial position
2011
2011
652.1
95.0
122.6
63.8
98
48.9
567.6
2010
2009 (1)
2008 (1)
2007 (1)
579.4
79.0
105.0
55.3
85
39.0
507.7
506.0
512.0
466.6
66.0
92.0
42.9
66
46.3
71.7
29.4
45
34.0
58.1
24.0
37
21.4
483.1
14.7
418.4
36.0
441.6
Total debt to equity attributable to equity holders of the Company (3)
Net return on opening equity attributable to equity holders of the Company
Return on opening invested capital (4)
0.0%
16.3%
27.1%
0.0%
16.1%
23.8%
0.0%
13.8%
18.3%
0.0%
9.1%
11.6%
8.4%
8.8%
10.0%
Revenue: Ten-year compound average growth rate (“CAGR”) 8.4%
$ U.S. million
700
600
500
400
300
200
100
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(1) Amounts are as previously reported under Canadian GAAP.
(2) EBITDA (income before interest, tax, depreciation and amortization) is not a recognized measure under International Financial Reporting Standards
(IFRS). Management believes that in addition to net income attributable to equity holders of the Company, EBITDA is a useful supplemental measure as
it provides investors with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Investors should be
cautioned, however, that EBITDA should not be construed as an alternative to net income attributable to equity holders of the Company determined in
accordance with IFRS as an indicator of the Company’s performance. The Company’s method of calculating EBITDA may differ from other companies
and, accordingly, EBITDA may not be comparable to measures used by other companies.
(3) Total debt is de(cid:2) ned as long-term debt plus bank overdrafts less cash and cash equivalents. At December 25, 2011, December 26, 2010, December
27, 2009 and December 28, 2008, cash and cash equivalents exceeded long-term debt plus bank overdrafts.
(4) Return on opening invested capital is de(cid:2) ned as income from operations divided by invested capital, which is de(cid:2) ned as the sum of total debt, equity,
net deferred tax liability, and accumulated goodwill amortization.
2
MANAGEMENT’S DISCUSSION AND ANALYSIS
Certain statements made in the following Management’s Discussion and Analysis contain forward-looking statements including, but not limited to,
statements concerning possible or assumed future results of operations of the Company. Forward-looking statements represent the Company’s intentions,
plans, expectations and beliefs, and are not guarantees of future performance. Such forward-looking statements represent Winpak’s current views based
on information as at the date of this report. They involve risks, uncertainties and assumptions and the Company’s actual results could differ, which in
some cases may be material, from those anticipated in these forward-looking statements. Unless otherwise required by applicable securities law, Winpak
disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. The
Company cautions investors not to place undue reliance upon forward-looking statements.
General Information
The following discussion and analysis dated February 16, 2012 was prepared by management and should be read in conjunction with the consolidated
(cid:2) nancial statements prepared in accordance with International Financial Reporting Standards (IFRS). The Company’s adoption of IFRS is effective as
of December 27, 2010, the start of the 2011 (cid:2) scal year. Comparative (cid:2) gures for (cid:2) scal 2010 have been restated in accordance with IFRS, including the
December 28, 2009 transition date balance sheet. The following discussion and analysis is presented in US dollars except where otherwise noted. The
consolidated (cid:2) nancial statements include the accounts of all subsidiaries. As part of the Company’s conversion to IFRS, entities with the Canadian dollar
as their functional currency under Canadian GAAP changed their functional currency to the US dollar. As a result, the Company’s functional and reporting
currency is the US dollar. The Company has (cid:2) led a separate Management’s Discussion and Analysis for its fourth quarter of 2011, which is available on
SEDAR at www.sedar.com.
Company Overview
Winpak is an integrated converter operating in the packaging materials segment. The Company utilizes manufacturing technology focused on the core
competency of sophisticated extrusion and conversion of plastic and aluminum foil materials. The business encompasses three product groups produced
in eight manufacturing facilities located in North America. Winpak distributes products to customers primarily in North America for use in the packaging
of perishable foods, beverages and in health-care applications.
Selected Financial Information
Millions of US dollars, except per share and margin amounts
Net income attributable to equity holders of the Company
Income from operations
Revenue
Gross pro(cid:2) t margin
Earnings per share (cents)
Dividends declared per common share (Canadian cents)
Total assets
Cash and cash equivalents
2011
63.8
95.0
652.1
28.8%
98
12
567.6
126.9
2010
55.3
79.0
579.4
29.8%
85
12
507.7
90.5
3
MANAGEMENT’S DISCUSSION AND ANALYSIS
Overall Performance
(cid:4) Revenue grew by $72.6 million from 2010 levels on the strength of improved volumes of 6.6 percent, representing $38.4 million in revenue.
This was further supplemented by higher overall selling prices and a stronger Canadian dollar which resulted in additional revenue of $30.0
million and $4.2 million respectively.
(cid:4) Gross pro(cid:2) t margins declined by one percentage point from the prior year to 28.8 percent of revenue, but remained above the (cid:2) ve-year
average for the Company. The continued escalation in raw material costs had a negative impact on margins, but selling price increases,
improved product mix and manufacturing performance helped to partially offset this effect.
(cid:4) Net income attributable to equity holders of the Company moved up to $63.8 million from $55.3 million in 2010, an increase of 15.3 percent or
$8.5 million. This advancement was due primarily to improved sales volume, product mix, manufacturing performance and limited growth in
operating and other expenses. In addition, 2010 contained a one-time recognition of a withdrawal liability under IFRS related to a multiemployer
de(cid:2) ned bene(cid:2) t pension plan which negatively impacted results for that year.
(cid:4) Cash position improved by $36.4 million to end the year at $126.9 million due primarily to strong cash (cid:3) ow from operating activities. The
Company has no bank overdrafts or long-term debt outstanding.
Highlights
(cid:4) Raw materials: Raw material costs continued their ascent of the last two years as the Company’s raw material index climbed by 15.3 percent
over the previous year and more than 36 percent in the last two years.
(cid:4) Manufacturing performance: Lower waste levels and enhanced productivity, due in part to higher sales volumes, helped drive further
improvements in manufacturing performance over and above those attained in 2010. These provided support to gross pro(cid:2) t margins which
were otherwise negatively impacted by higher raw material costs.
(cid:4) Operating expenses: The Company was successful at limiting its percentage increase in operating expenses to approximately half of the
increase in sales volumes, resulting in a betterment to earnings per share of approximately 3.5 cents. Personnel costs, in particular, were
closely controlled and were a major contributing factor to the enhanced result.
(cid:4) Foreign exchange: In 2011, the average exchange rate of the Canadian dollar appreciated against the US dollar when compared to the prior
year by 4.6 percent, negatively impacting results. Coupled with greater foreign exchange losses in 2011 on translation of Canadian dollar net
monetary items and foreign exchange gains recorded in 2010 on Canadian income taxes, the overall foreign exchange impact on net income
attributable to equity holders of the Company was a reduction of approximately $4.6 million or 7.0 cents per share in comparison to 2010.
(cid:4) Capital expenditures: Capital expenditures in 2011 totaled $48.9 million, an all-time high for the Corporation. Nearly 80 percent of this amount
relates to projects still in progress at the end of the year, with completion slated for various points in time throughout 2012 and into 2013. This
is the (cid:2) rst year of an ambitious organic expansion program, aimed at advancing revenue to a level approaching $1 billion by the end of 2015,
known throughout the Winpak organization as the “Billion Dollar Commitment” (“BDC”).
(cid:4) Financing and investing: During 2011, Winpak generated $95.4 million in cash (cid:3) ow from operating activities, which was more than suf(cid:2) cient to
fund $48.9 million in capital projects, $7.8 million in dividends, and return equity to the non-controlling interests in a subsidiary of $1.8 million,
leaving a year-end net cash position of $126.9 million. The Company will utilize its cash resources on hand and generate additional cash (cid:3) ow
from operations to fund its investing and (cid:2) nancing activities in 2012. In addition, management will continue to evaluate strategic acquisition
opportunities in concert with implementing the BDC plan, all focused on enhancing long-term shareholder value.
4
Results of Operations
Components of total increase in earnings per share
Organic growth
Gross pro(cid:2) t margins
Expenses and non-controlling interests
Withdrawal liability expense on de(cid:2) ned bene(cid:2) t multiemployer pension plan
Foreign exchange
Total increase in earnings per share (cents)
2011
5.5
4.0
3.5
7.0
(7.0)
13.0
Ongoing operations
Organic growth is the impact on net income due exclusively to increased sales volume and excludes the in(cid:3) uence of acquisitions, divestitures and foreign
exchange. In 2011, this added 5.5 cents to earnings per share in comparison to the prior year.
In spite of the continued escalation in raw material costs in 2011, the Company was able to neutralize its impact on net income through improvements in
product mix and manufacturing performance, and the partial hedge provided by selling price-indexing agreements.
The Company was successful in limiting the rise in operating expenses relative to sales volumes, resulting in an enhancement in earnings per share of
approximately 3.5 cents. Furthermore, in the prior year, the Company recorded a one-time withdrawal liability related to the one multiemployer de(cid:2) ned
bene(cid:2) t pension plan that the Company participates in, depressing 2010 earnings per share by 7.0 cents.
On average, in 2011, the Canadian dollar was stronger against its US counterpart than in 2010, negatively impacting net income when applied to the
Company’s net Canadian dollar disbursements. Net income was further impacted by foreign translation exchange losses on Canadian net monetary items
in the current year in addition to foreign exchange gains recorded in 2010 by the Canadian legal entites on (cid:2) ling their income tax returns in Canadian
dollars. The net result was a reduction in 2011 earnings per share of 7.0 cents in relation to 2010.
Revenue
Revenue Change
Volume increase
Price and mix gains (losses)
Foreign exchange gain (loss)
Total increase (decrease) in revenue
Millions of US dollars
2010
51.5
12.6
9.4
73.5
2011
38.4
30.0
4.2
72.6
2009
24.8
(23.2)
(7.6)
(6.0)
Revenue reached an all-time high of $652.1 million, increasing by $72.6 million or 12.5 percent from the prior year. More than half of the revenue
expansion was due to volume growth of 6.6 percent or $38.4 million, with rigid packaging, including specialty beverage and condiment containers, leading
the way at over a 20 percent ascent . Packaging machinery also had a very solid year, advancing by over 15 percent on the strength of both parts and
new machinery demand. Lidding and modi(cid:2) ed atmosphere packaging sales volumes progressed in the low single-digit percentage range, while the more
commodity-related biaxially oriented nylon and specialty (cid:2) lms receded by a similar amount. The lacklustre performance of the US economy during 2011
held back growth, particularly in more commodity-related products. Selling price increases paralleled higher raw material costs and together with mix
changes, furthered 2011 revenue by 5.2 percent or $30.0 million compared to the previous year. The conversion of Canadian dollar sales into US funds
at a higher average exchange rate in 2011 versus 2010 supplemented revenue by an additional 0.7 percent or $4.2 million.
Gross pro(cid:2) t margins
Gross pro(cid:2) t margins reached a level of 28.8 percent of revenue in 2011, one full percentage point less than the result achieved in the prior year.
Escalating raw material costs negatively impacted margins by over 2 percentage points in 2011 versus 2010. However, this was partly offset by enhanced
manufacturing performance as a result of lower waste and heightened productivity levels. This, along with product mix improvements and a reasonable
amount of success in matching raw material cost progressions with selling price increases, resulted in an increment of 4.0 cents in earnings per share in
2011, as the growth in dollar terms of gross pro(cid:2) t was $15.3 million or 8.9 percent, which exceeded the relative expansion in sales volumes of 6.6 percent.
5
MANAGEMENT’S DISCUSSION AND ANALYSIS
Winpak’s raw material index, which represents the weighted cost of a basket of the Company’s eight principal raw materials, rose by 15.3 percent during
2011. This continued the escalation of the past two years which has seen the average annual index jump by over 36 percent during this period. The
Company, however, has a partial natural hedge against rising raw material costs in that greater than 60 percent of the Company’s revenues are subject to
formal selling price-indexing agreements, whereby selling prices are adjusted as raw material costs change, albeit with a time lag.
Raw Material Index
Average annual index: weighted cost of a basket of Winpak’s eight
principal raw materials , where base year 2001 = 100
Increase (decrease) in index compared to prior year
2011
2010
2009
177.4
15.3%
153.8
17.9%
130.4
(25.1%)
Expenses
On a net basis, lower operating and other expenses, excluding foreign exchange, resulted in an improvement in earnings per share of 10.5 cents in
2011 versus the prior year. In 2010, the Company recognized a one-time withdrawal liability under IFRS related to the one multiemployer de(cid:2) ned bene(cid:2) t
pension plan in which the Company participates. After being informed by an independent board of trustees that the plan was in a critical status funding
position, the Company made the decision to withdraw from the plan and became responsible for making certain payments into the plan over a twenty-
year period; 2010 earnings per share were reduced accordingly by 7.0 cents per share. The organization was also able to leverage its expenditure on
operating expenses by limiting the increase in expenses, excluding foreign exchange impacts to just 3.5 percent while sales volumes strengthened by 6.6
percent in relation to 2010. In particular, personnel expenses included within operating expenses declined slightly, after adjusting for foreign exchange
differences, and contributed to earnings per share growth of approximately 3.5 cents. The reduction in net income attributed to non-controlling interests
resulted in an additional 1 cent in earnings per share compared to 2010 while a higher overall effective income tax rate in 2011, due primarily to a larger
proportion of net income being earned in higher tax jurisdictions, reduced earnings per share by 1 cent.
Foreign Exchange
Year-end exchange rate of CDN dollar to US dollar
Year-end exchange rate of US dollar to CDN dollar
(Depreciation) appreciation of CDN dollar vs. US dollar year-end
exchange rate compared to the prior year
Average exchange rate of CDN dollar to US dollar
Average exchange rate of US dollar to CDN dollar
Appreciation (depreciation) of CDN dollar vs. US dollar average
exchange rate compared to the prior year
2011
0.980
1.021
(1.1%)
1.010
0.991
2010
0.991
1.009
4.1%
0.966
1.035
2009
0.952
1.050
15.3%
0.870
1.149
4.6%
11.0%
(8.0%)
Under IFRS, Winpak utilizes the US currency as both its reporting and functional currency. However, with half of its manufacturing facilities located in
Canada, it is exposed to foreign exchange risks and records foreign currency differences on transactions and translations denominated in Canadian
dollars as well as other foreign currencies.
In total, foreign exchange had a negative impact on earnings per share of approximately 7.0 cents in 2011 compared to 2010. Approximately 17 percent of
sales in the current year are denominated in Canadian dollars and approximately 29 percent of costs are incurred in the same currency. The net out(cid:3) ow
of Canadian dollars exposes Winpak to transaction differences arising from exchange rate (cid:3) uctuations. The appreciation in the average exchange rate of
the Canadian dollar in relation to the US dollar in 2011 decreased earnings per share by approximately 1.5 cents compared to the prior year. In addition,
translation differences arise when primarily Canadian dollar monetary assets and liabilities are translated at exchange rates that change over time. The
change in spot conversion rate of the Canadian dollar from the start to the end of the year decreased earnings per share in 2011 by 1.0 cent in comparison
to 2010. Although gains were realized on the maturation of foreign exchange contracts entered into as part of the Company’s foreign exchange policy, the
gains were lower than in 2010, further decreasing earnings per share by 0.5 cents in 2011 versus the prior year. In 2010, the Company’s Canadian legal
entities (cid:2) led their income tax returns in Canadian dollars, a currency different from their functional currency under IFRS. This resulted in foreign exchange
gains in 2010 approaching 4.0 cents in earnings per share which reduced income tax expense. In 2011, the Company received approval from the Canada
Revenue Agency to (cid:2) le its Canadian income tax returns in US dollars, thereby eliminating this foreign exchange (cid:3) uctuation in 2011 and subsequent years.
6
Summary of quarterly results
Thousands of US dollars, except earnings per share (e.p.s.) amounts (cents)
Quarter ended
Revenue
March 27
June 26
September 25
December 25
148,537
161,340
170,670
171,516
652,063
2011
Net income*
14,694
16,195
14,408
18,486
63,783
*attributable to equity holders of the Company
e.p.s.
Quarter ended
Revenue
Net income*
e.p.s.
2010
March 28
June 27
September 26
December 26
23
25
22
28
98
132,888
145,568
146,055
154,930
579,441
15,240
14,130
13,132
12,794
55,296
23
22
20
20
85
Various factors affect timing of the Company’s income during the course of a year. Typically, seasonal factors contribute to stronger revenue and net
income in the second and fourth quarters compared to the (cid:2) rst and third quarters. Factors in(cid:3) uencing seasonal trends are the higher demand for certain
food products in advance of the summer season and the greater number of holidays in the fourth quarter. During the third quarter, revenue and net
income are typically lower due to reduced order levels and plant maintenance shutdowns scheduled to coincide with the summer. Sudden and substantial
changes in the rate of exchange between the US and Canadian dollars from one quarter to another may cause revenue and net income to vary from the
historic trend. Similarly, sudden and signi(cid:2) cant changes in the cost of raw materials consumed from one quarter to another can be expected to increase
or decrease net income in a manner that does not conform to the normal pattern. Furthermore, unexpected adverse weather conditions could in(cid:3) uence
the supply and price of raw materials or customer order levels, and the timing of startup of new manufacturing equipment can cause revenue and net
income to depart from established trends.
The following items in(cid:3) uenced the timing of the Company’s reported results beyond historic trends. Net income in the (cid:2) rst quarter of 2010 was bolstered
by higher foreign exchange gains, while 2010 fourth quarter net income was negative impacted by the recording ot the withdrawal liability related to the
multiemployer de(cid:2) ned bene(cid:2) t pension plan. Revenue in 2010 followed the normal pattern with the exception of the third quarter where revenue exceeded
that of the second quarter by only 0.3 percent. In 2011, net income followed the established pattern previously described whereas revenue in the third
quarter was elevated due to selling price increases and an atypical surge in demand in rigid containers in the period.
Cash Flow, Liquidity and Capital Resources
At December 25, 2011, Winpak’s cash position totaled $126.9 million, an increase of $36.4 million or 40.2 percent from the prior year-end. This
improvement re(cid:3) ected total funds provided by operating activities of $95.4 million less disbursements for investing activities of $49.4 million and (cid:2) nancing
activities of $9.6 million.
Operating activities
Cash (cid:3) ow provided by operating activities totaled $95.4 million, a net improvement of $17.3 million from 2010. The cash (cid:3) ow derived from operating
activities, before changes in working capital and employee bene(cid:2) t plan payments, improved by $18.9 million in total from the prior year. The increase in
net income in 2011 of $7.8 million plus the increases in depreciation and amortization of $1.7 million and income tax expense of $8.6 million accounted for
$18.1 million of the advancement. The elevation in income tax expense is as a result of an improvement in earnings performance and a higher effective
income tax rate in 2011 due to a larger proportion of net income being earned in higher tax jurisdictions as well as foreign exchange gains recorded against
income tax expense in 2010.
The investment in working capital for the year only advanced by $1.6 million, while revenue forged ahead by $72.6 million. Accounts receivable grew
by $6.7 million or 8.7 percent, less than the percentage increase in revenue of 10.7 percent in the fourth quarter of 2011 versus the prior year period.
Inventories edged up by a mere $1.9 million or 2.6 percent as the Company was able to effectively manage inventory levels to a minimum. Accounts
payable and accrued liability levels climbed by $6.8 million in part due to elevated payable levels related to property, plant and equipment additions in
progress at year-end. Payments were made to de(cid:2) ned bene(cid:2) t pension plans during the year totaling $5.1 million, $0.4 million more than in 2010.
Investing activities
Investing activities in 2011 reached $49.4 million, an increase of $10.1 million over 2010, and consisted of an all-time high amount of property, plant and
equipment purchases of $48.9 million and intangible assets of $0.5 million. This is in keeping with the Company’s philosophy of investing in the latest
and most advanced technology in order to retain its competitive advantage and represents the (cid:2) rst year of the organization’s capital spending under the
BDC plan. Of the $48.9 million in property, plant and equipment additions, $38.2 million consisted of construction in progress and equipment deposits,
projects which will not be in commercial production until various points in time throughout 2012 and into 2013. The largest undertaking is the construction
of a 260,000 square foot rigid packaging facility in Sauk Village, Illinois, at a year-to-date cost of over $15 million, with completion scheduled for the
7
MANAGEMENT’S DISCUSSION AND ANALYSIS
end of the (cid:2) rst quarter of 2012. Expansions of capacity in modi(cid:2) ed atmosphere packaging, lidding, specialty (cid:2) lms and rigid containers are in process
with investments in extrusion, printing, slitting and die-cutting capabilities. Over the long term, Winpak’s expenditures for equipment enhancements in
maintaining existing capacity have averaged approximately 2 percent of revenue.
Financing activities
Financing activities in 2011 consisted of dividends to common shareholders of $7.8 million and the preferred share redemption and dividend payment to a
non-controlling interest in a subsidiary totaling $1.8 million. The quarterly common share dividends were paid at the rate of CDN $0.03 per share which,
based on the December 25, 2011 closing share price of CDN $12.05, provides a dividend yield of 1.0 percent.
Resources
Investments to drive growth can be sizeable, requiring substantial (cid:2) nancial resources. A range of funding alternatives is available including cash and
cash equivalents, cash (cid:3) ow provided by operations, additional debt, issuance of equity or a combination thereof. An informal investment grade credit
rating allows the Company access to relatively low interest rates on debt. The Company currently has operating lines of $38 million, which are believed
adequate for liquidity purposes. None of the lines were utilized as at December 25, 2011. Based on formal and informal discussions with various (cid:2) nancial
institutions, Winpak is con(cid:2) dent that additional credit can be arranged from banks and other major lenders as the need arises. The Company believes that
all 2012 requirements for capital expenditures, working capital, and dividend payments can be (cid:2) nanced from cash resources, cash provided by operating
activities and unused credit facilities.
Risks and Financial Instruments
The Company recognizes that net income is exposed to changes in market interest rates, foreign exchange rates, prices of raw materials and risks
regarding the (cid:2) nancial condition of customers and (cid:2) nancial counterparties. These market conditions are regularly monitored and actions are taken, when
appropriate, according to Winpak’s policies established for the purpose. Despite the methods employed to manage these risks, future (cid:3) uctuations in
interest rates, exchange rates, raw material costs and counterparty (cid:2) nancial condition can be expected to impact net income.
Winpak’s policy regarding interest expense is to (cid:2) x interest rates on between one- and two-thirds of any long-term debt outstanding. The Company may
enter into derivative contracts or (cid:2) xed-rate debt to minimize the risk associated with interest rate (cid:3) uctuations.
With respect to foreign exchange risk, Winpak employs hedging programs to minimize risks associated with changes in the value of the Canadian dollar
relative to the US dollar. To the extent possible, the Company maximizes natural currency hedging by matching in(cid:3) ows from revenue in either currency
with out(cid:3) ows of costs and expenses denominated in the same currency. For the remaining exposure, the Company’s foreign exchange policy requires
that between 50 and 80 percent of the Company’s net requirement of Canadian dollars for the ensuing 9 to 15 months will be hedged at all times with
forward or zero-cost option contracts. The Company may also enter into forward foreign currency contracts when equipment purchases will be settled in
other foreign currencies. Purchases of foreign exchange products for the purpose of speculation are not permitted. Transactions are only conducted with
certain approved Schedule I Canadian (cid:2) nancial institutions.
Fluctuations in foreign exchange rates represent a material exposure for the Company’s (cid:2) nancial results. Hedging programs employed may mitigate
a portion of exposures to short-term (cid:3) uctuations in foreign currency exchange rates. However, the Company’s (cid:2) nancial results over the long term will
inevitably be affected by sizeable changes in the value of the Canadian dollar relative to the US dollar. Winpak estimates that each time the exchange
rate strengthens or weakens by one Canadian cent against the US dollar, net income, with respect to transaction differences, will decrease or increase,
respectively, by approximately one-half of a US cent per share.
During 2011, certain foreign currency forward contracts matured and the Company realized pre-tax foreign exchange gains of $1.1 million. As at
December 25, 2011, the Company had US to CDN dollar foreign currency forward contracts outstanding with a notional amount of $21.0 million and US
dollar to Swiss franc foreign currency forward contracts outstanding with a notional amount of $7.6 million. The pre-tax unrealized foreign exchange loss
on these contracts of $0.6 million was recorded in other comprehensive income.
Winpak has not participated in any derivatives market for raw materials. Winpak is not aware of any instrument that fully mitigates (cid:3) uctuations in raw
material costs over the long term. To manage this risk, Winpak has entered into formal selling price-indexing agreements with certain customers whereby
changes in raw material prices are re(cid:3) ected in selling price adjustments, albeit with a slight time lag. By the end of 2011, approximately 63 percent of
Winpak’s revenues were governed by selling price-indexing agreements. For all other customers, the Company responds to changes in raw material
costs by adjusting selling prices on a customer-by-customer basis. However, market conditions can have an impact on these price adjustments such that
the combined impact of selling price adjustments and changes in raw material costs can be signi(cid:2) cant to Winpak’s net income.
Credit risk arises from cash and cash equivalents held with banks, derivative (cid:2) nancial instruments (foreign currency forward and option contracts), as
well as credit exposure to customers, including outstanding accounts receivable. The Company assesses the credit quality of counterparties, taking into
account their (cid:2) nancial position, past experience and other factors. Management regularly monitors customer credit limits, performs credit reviews and,
in certain cases, insures accounts receivable balances against credit losses. The Company invests its excess cash on a short-term basis, to a maximum
of six months, with (cid:2) nancial institutions and/or governmental bodies that must be AA rated or higher by a recognized international credit rating agency or
insured 100 percent by a AAA rated Canadian or US government. Nonetheless, unexpected deterioration in the (cid:2) nancial condition of a counterparty can
have a negative impact on the Company’s net income in the case of default.
8
The Company enters into contractual obligations in the normal course of business operations. These obligations, as at December 25, 2011, are
summarized below.
Contractual Obligations
Payment due, by period (thousands of US dollars)
Operating leases
Purchase obligations
Total contractual obligations
Accounting Policy Changes
Total
1 year
2 - 3 years
4 - 5 Years
After 5 years
4,534
35,184
39,718
1,529
35,184
36,713
2,423
-
2,423
582
-
582
-
-
-
International Financial Reporting Standards
In February 2008, the Canadian Accounting Standards Board con(cid:2) rmed that Publicly Accountable Enterprises will be required to adopt International
Financial Reporting Standards (IFRS) for interim and annual (cid:2) nancial statements relating to (cid:2) scal years beginning on or after January 1, 2011. As
permitted under National Instrument 52-107, the Company has elected to adopt IFRS for its (cid:2) scal year beginning December 27, 2010 and accordingly
reported under this basis as of the (cid:2) rst quarter of 2011, with (cid:2) scal 2010 comparative (cid:2) nancial information being presented using IFRS.
Note 29 details the impact of the transition to IFRS on the Company’s reported balance sheet, changes in equity, statements of income, comprehensive
income and cash (cid:3) ows, including the nature and effect of signi(cid:2) cant changes in accounting policies from those used in the Company’s Canadian GAAP
consolidated (cid:2) nancial statements for the year ended December 26, 2010. The following highlights the impacts of the more signi(cid:2) cant changes in
accounting policies:
First-Time Adoption of International Financial Reporting Standards – IFRS 1, First-Time Adoption of International Financial Reporting Standards, provides
guidance for an entity’s initial adoption of IFRS and generally requires the retrospective application of all IFRS effective at the end of its (cid:2) rst IFRS reporting
period. IFRS 1 however does include certain mandatory exceptions and allows certain limited optional exemptions from this general requirement of
retrospective application. The exemptions and exceptions most relevant to the Company under IFRS 1 on the opening transition date of December 28,
2009 are as follows:
i.
ii.
iii.
iv.
v.
vi.
Business combinations – An exemption is available within IFRS 1 that allows a Company to carry forward its previous Canadian
GAAP accounting for business combinations prior to the transition date. The Company has elected to apply this exemption and as
a result, acquisitions prior to December 28, 2009 have not been restated to comply with IFRS 3 “Business Combinations”.
Fair value as deemed cost – This exemption allows a Company to revalue property, plant and equipment at fair value at its transition
date and use this fair value as the deemed cost. The Company did not apply this exemption.
Borrowing costs – This exemption allows an entity to adopt IAS 23 “Borrowing Costs” prospectively on qualifying assets for which
the capitalization commencement date is after the transition date. The Company applied this exemption.
Employee bene(cid:2) ts – IFRS 1 allows a Company to recognize all cumulative actuarial gains and losses at the transition date. The
Company has elected to apply this exemption and all unrecognized actuarial gains and losses have been recognized, resulting in a
charge to opening retained earnings at December 28, 2009 of $10.0 million. In addition, the Company has applied the exemption
whereby employee bene(cid:2) t plan historical disclosures required under IAS 19, Employee Bene(cid:2) ts, may be provided only for (cid:2) scal
years subsequent to the transition to IFRS.
Cumulative translation differences – This exemption allows a Company to deem the amount of cumulative translation differences
to be zero at transition and instead, transfer this amount into retained earnings. The Company has elected to apply this exemption
at December 28, 2009, resulting in the cumulative translation differences balance of $18.3 million being transferred to increase
retained earnings.
Estimates – IFRS 1 prescribes a mandatory exemption from full retrospective application of IFRS as it relates to the use of estimates.
It requires that a company’s estimates in accordance with IFRS at the date of transition to IFRS must be consistent with estimates
made for the same date in accordance with previous Canadian GAAP (after adjustments to re(cid:3) ect any difference in accounting
policies), unless there is objective evidence that those estimates were in error. The Company did not use hindsight in its estimates
upon transition to IFRS, nor did it (cid:2) nd any evidence that any of its previously made estimates were in error.
Functional Currency – IAS 21, The Effects of Changes in Foreign Exchange Rates, requires that the functional currency of each entity in a consolidated
group be determined separately based on the currency of the primary economic environment in which the entity operates. A list of primary and secondary
indicators is used under IFRS in this determination and these differ in content and emphasis to a certain degree from those factors used under Canadian
GAAP. The parent Company and all of its Canadian subsidiaries, with the exception of American Biaxis Inc., operated with the Canadian dollar as their
functional currency under Canadian GAAP. However, it was determined that under IFRS, these same entities had a change in their functional currency at
varying points in prior years, such that all entities within the Winpak group now operate with the US dollar as their functional currency. The historical cost
basis for certain balance sheet items is different under IFRS than it was under Canadian GAAP and the balance in the cumulative translation differences
for each of these Canadian subsidiaries was held constant at the amount in effect at the date of the change in functional currency. The impact of this
change in functional currency, as at December 28, 2009, was a net decrease in equity of $15.9 million. For the year ended December 26, 2010, the
9
MANAGEMENT’S DISCUSSION AND ANALYSIS
change in functional currency increased net income by $7.0 million and decreased other comprehensive income by $9.5 million. The speci(cid:2) c line items
affected by the change in functional currency are detailed in note 29 to the consolidated (cid:2) nancial statements. Going forward, income volatility due to
foreign exchange (cid:3) uctuations should decline as the magnitude of net Canadian dollar monetary (cid:2) nancial asset exposure is signi(cid:2) cantly less than the net
US dollar monetary (cid:2) nancial asset exposure within the Canadian entities.
Impairment of Assets – Upon transition to IFRS, all of the Company’s property, plant and equipment and intangible assets, including goodwill, were
reviewed to determine whether there were any indications of impairment. When these indications were present, the asset’s recoverable amount was
estimated. IAS 36, Impairment of Assets, uses a one-step approach for both testing for and measurement of impairment, with asset carrying values
compared directly with the higher of fair value less costs to sell and value in use, which is based on discounted future cash (cid:3) ows. Canadian GAAP, on
the other hand, generally used a two-step approach to impairment testing of long-lived assets and (cid:2) nite-life intangible assets by (cid:2) rst comparing asset
carrying values with undiscounted future cash (cid:3) ows to determine whether impairment existed. If it was determined that there was impairment under
this basis, the impairment was then calculated by comparing asset carrying values with fair values in much the same manner as computed under IFRS.
Additionally under IFRS, testing for impairment occurs at the level of cash generating units (CGUs), which is the lowest level of assets that generate
largely independent cash in(cid:3) ows. This lower level of grouping compared to Canadian GAAP along with the one-step approach to testing for impairment
may increase the likelihood that the Company will realize an impairment of assets under IFRS in the future. It should also be noted that under IAS 36,
previous impairment losses, with the exception of goodwill, can be reversed when there are indications that circumstances have changed whereas
Canadian GAAP prohibited reversal of non-(cid:2) nancial asset impairment losses. As of the transition date of December 28, 2009, the Company determined
that an impairment of goodwill with regard to the specialty (cid:2) lm business had taken place under IAS 36. This resulted in a reduction of goodwill and
retained earnings of $3.4 million as of that date.
Employee Bene(cid:2) t Plans – As previously mentioned, under IFRS 1, the Company has elected to recognize all cumulative actuarial gains and losses
at the transition date, resulting in a charge to opening retained earnings at December 28, 2009 of $10.0 million. Under Canadian GAAP, past service
costs for de(cid:2) ned bene(cid:2) t pension plans were generally amortized on a straight-line basis over the expected average remaining service period of active
employees in the plan. IAS 19, Employee Bene(cid:2) ts, requires the past service costs to be expensed on an accelerated basis, with vested past service
costs being expensed immediately and unvested past service costs being recognized on a straight-line basis until the bene(cid:2) ts become vested. This
resulted in a charge to retained earnings at December 28, 2009 of $1.4 million. Under IAS 19 and IFRIC 14, the Company is not able to report an asset
in its (cid:2) nancial statements in excess of the economic bene(cid:2) t it can expect to receive in the form of a refund of a pension plan surplus and/or a reduction
in future contributions. This differs from the treatment allowed under Canadian GAAP and as a result, under IFRS, the impact as at December 28, 2009
is a decrease in retained earnings of $1.1 million. In total, the changes under IFRS related to employee bene(cid:2) ts resulted in a net decrease to opening
retained earnings upon transition of $12.5 million.
Subsequent to the transition date, the Company has selected to recognize actuarial gains and losses directly in equity through other comprehensive
income as its accounting policy choice under IAS 19 to be consistent with the latest revisions to the standard issued by the IASB which will become
mandatory for annual periods beginning on or after January 1, 2013. Under Canadian GAAP, unrecognized actuarial gains and losses, in excess of 10
percent of the greater of the bene(cid:2) t obligation or the fair value of plan assets, were amortized to the statement of income on a straight-line basis over the
expected average remaining service lives of active plan members. This change in policy recognition of actuarial gains and losses along with the other
changes under IFRS related to past service costs and recognition of pension assets, had a minimal effect on net income for the year ended December 26,
2010. The employee bene(cid:2) t accounting changes had a marginal increase of $0.4 million on other comprehensive income for the year ended December
26, 2010.
Under IFRS, interest costs on the bene(cid:2) t obligation of de(cid:2) ned bene(cid:2) t plans are charged to the statement of income as a (cid:2) nance expense and the
expected return on employee bene(cid:2) t plan assets is presented as (cid:2) nance income. Under Canadian GAAP, these two items were presented as part of
personnel expenses within various lines within the statement of income. As a result of this change, (cid:2) nance income and (cid:2) nance expense increased by
$3.5 million for the year ended December 26, 2010. Various other reclassi(cid:2) cations related to this item were insigni(cid:2) cant.
Provisions – Under IAS 37, Provisions, Contingent Liabilities and Contingent Assets, the threshold for recording provisions is considerably lower than
under Canadian GAAP as the probability for recording a provision for a cash out(cid:3) ow has to be only more likely than not under IFRS. Under Canadian
GAAP, the probability of a future out(cid:3) ow has to be viewed as likely before a liability is recorded, which is a much higher probability than under IFRS. As
a result, provisions are inclined to be recorded more often and/or sooner under IFRS than under Canadian GAAP.
The Company participates in one multiemployer de(cid:2) ned bene(cid:2) t pension plan providing bene(cid:2) ts to certain unionized employees in the US. Under IAS
19, multiemployer plans, that are de(cid:2) ned bene(cid:2) t plans, are to be accounted for as such under IFRS unless suf(cid:2) cient information is not available to use
de(cid:2) ned bene(cid:2) t accounting. Most multiemployer plans, by their nature, do not provide suf(cid:2) cient information to participating employers to enable them
to use de(cid:2) ned bene(cid:2) t accounting. However, IAS 19 notes that IAS 37 should be considered for certain multiemployer plans. IAS 37 is applicable in
recognizing a liability where there is a contractual agreement to determine how a de(cid:2) cit would be funded. The board of independent trustees of the
multiemployer plan communicated to both the Company and the Union that this plan was in a critical status position from a funding perspective in 2010.
During the fourth quarter of 2010, the Company, with the assistance of external consultants, determined that the only economically feasible course of
action was to withdraw from the plan. In 2011, an agreement was reached with the Union to withdraw from the plan and the necessary paperwork was
(cid:2) led with the plan trustees. Pursuant to US federal pension legislation, an employer who withdraws from a plan with unfunded vested bene(cid:2) ts is legally
responsible for a share of that underfunding. Based on the relevant facts and circumstances, it was concluded that the potential withdrawal liability met
the de(cid:2) nition of a provision under IFRS as at December 26, 2010, which was not the case under Canadian GAAP. As a result of this difference, for the
year ended December 26, 2010, other expenses increased by $7.1 million and income tax expense decreased by $2.5 million, for a reduction in net
income of $4.6 million.
10
Income Taxes – Under Canadian GAAP, when the functional currency for accounting purposes differed from the functional currency for taxation purposes,
deferred taxes were (cid:2) rst calculated in the currency in which income taxes were paid and then translated to the functional currency for accounting purposes
at the period end exchange rate. Under IFRS, IAS 12, Income Taxes, deferred taxes are calculated based on the functional currency for accounting
purposes, regardless of the functional currency used for taxation purposes. As a result of this difference between Canadian GAAP and IFRS, retained
earnings increased by $0.9 million and non-controlling interests increased by $0.8 million as at December 28, 2009. The offset was an increase in
deferred tax assets. There was virtually no impact on 2010 net income in regard to this change.
Non-controlling interest – Under Canadian GAAP, minority interest was classi(cid:2) ed in the consolidated balance sheets between total liabilities and equity.
Under IAS 27, Consolidated and Separate Financial Statements, minority interest is reclassi(cid:2) ed to a separate component of equity entitled non-controlling
interest. As at December 28, 2009, this reclassi(cid:2) cation was $15.9 million. Under Canadian GAAP, minority interest in the consolidated statements of
income was presented as an expense. Under IFRS, non-controlling interests are presented as an allocation of net income for the period.
Future Accounting Changes
As more fully described in Note 5 to the Consolidated Financial Statements, various new accounting standards have been issued which apply as follows:
IFRS 7 “Financial Instruments: Disclosures”, effective for annual periods beginning July 1, 2011; IFRS 10 “Consolidated Financial Statements”, IFRS
11 “Joint Arrangements”, IFRS 12 “Disclosure of Interests in Other Entities”, amended IAS 27 “Separate Financial Statements”, and amended IAS
28 “Investments in Associates and Joint Ventures”, effective for annual periods beginning January 1, 2013; amended IAS 32 “Financial Instruments:
Presentation”, effective for annual periods beginning January 1, 2014; and IFRS 9 “Financial Instuments”, effective for annual periods beginning January
1, 2015. None of these standards is expected to have a signi(cid:2) cant impact on the Company’s consolidated (cid:2) nancial statements.
The IASB issued an amendment to IAS 1 “Financial Statement Presentation” regarding the presentation of items of other comprehensive income. This
amendment is effective for annual periods beginning July 1, 2012 and is not expected to have a signi(cid:2) cant impact on the Company’s consolidated (cid:2) nancial
statements.
The IASB also issued a new accounting standard and an amended standard effective for annual periods beginning January 1, 2013: IFRS 13 “Fair
Value Measurement” which is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards;
and amended IAS 19 “Employee Bene(cid:2) ts” which is a comprehensive set of amendments dealing with the manner in which pensions and other employee
bene(cid:2) ts are recorded, classi(cid:2) ed and disclosed in the (cid:2) nancial statements. The Company has not yet begun the process of assessing the impact that
these standards will have on its consolidated (cid:2) nancial statements.
Looking Forward
The Company is optimistic as it enters 2012, after a very satisfying end to 2011. The outlook for the US economy, where over three-quarters of the
Company’s business is conducted, appears to be more favorable moving forward, which should strengthen future sales volumes. Unfortunately, with
enhanced economic activity usually comes increased raw material costs which will bring pressure to bear on margins. The challenge will be to match
these raw material increases with selling price changes to the greatest degree possible. With over 60 percent of the organization’s revenues subject to
customer price-indexing agreements, whereby selling prices are adjusted as raw material costs change, albeit with a time lag, Winpak has a built-in partial
hedge to raw material cost in(cid:3) ation. This should help to keep margins within a few percentage points of current levels for 2012.
The Company’s commitment to investment in the latest technology to remain at the forefront in terms of product offerings continued in 2011 with the
highest levels ever spent on property, plant and equipment in Winpak’s history. Although capital investment is never without risk, the focus continues on
markets within which the Company is familiar and utilizing extrusion technologies that have formed the backbone of the organization’s success. This will
continue in 2012 with plans to approximately double capital spending to further broaden the product range as well as add to existing capacity aimed at
achieving $1 billion in revenue by the year 2015. A major expansion is planned for the Montreal facility to bolster the Company’s foil technology, extrusion
capacity will be expanded in the modi(cid:2) ed atmosphere packaging plant in Winnipeg, additional extrusion equipment is planned for the specialty (cid:2) lms
unit in Georgia and extrusion lines will be installed in the new Sauk Village, Illinois rigid packaging site. As capacity comes on stream and equipment is
commissioned, there will be temporary margin contractions while technical challenges get resolved and revenues build to the anticipated volumes. The
Company also remains dedicated to evaluating external acquisition opportunities that would complement its core competencies in the areas of food and
health care packaging. With Winpak’s extremely solid (cid:2) nancial position, it has the resources available to consummate an acquisition transaction while
still remaining strongly committed to the organic growth capital investment plan.
Critical Accounting Estimates
The Company believes the following accounting estimates are critical to determining and understanding the operating results and the (cid:2) nancial position
of the Company.
Impairment of property, plant and equipment and intangible assets – An integral component of impairment testing is determining the asset’s recoverable
amount. The determination of the recoverable amount involves signi(cid:2) cant management judgment, including projections of future cash (cid:3) ows and
appropriate discount rates. The cash (cid:3) ows are derived from the (cid:2) nancial forecast for the next (cid:2) ve years and do not include restructuring activities that the
Company is not yet committed to or signi(cid:2) cant future investments that will enhance the asset’s performance of the CGU being tested. Qualitative factors,
including market presence and trends, strength of customer relationships, strength of local management, strength of debt and capital markets, and degree
of variability in cash (cid:3) ows, as well as other factors, are considered when making assumptions with regard to future cash (cid:3) ows and the appropriate discount
11
MANAGEMENT’S DISCUSSION AND ANALYSIS
rate. The recoverable amount is most sensitive to the discount rate used for the discounted cash (cid:3) ow model as well as the expected future cash in(cid:3) ows
and the growth rate used for extrapolation purposes. A change in any of the signi(cid:2) cant assumptions or estimates could result in a material change in the
recoverable amount. The company has eight CGUs, of which the carrying values for two include goodwill and must be tested for impairment annually.
Employee bene(cid:2) t plans – Accounting for employee bene(cid:2) t plans requires the use of actuarial assumptions. The assumptions include the discount rate,
expected rate of return on plan assets, rate of compensation increase and health care costs. These assumptions depend on underlying factors such as
economic conditions, government regulations, investment performance, employee demographics and mortality rates. These assumptions could change
in the future and may result in material adjustments to employee bene(cid:2) t plan assets or liabilities.
Disclosure Controls and Internal Controls
Disclosure controls
Management is responsible for establishing and maintaining disclosure controls and procedures in order to provide reasonable assurance that material
information relating to the Company is made known to them in a timely manner and that information required to be disclosed is reported within time periods
prescribed by applicable securities legislation. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures,
including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls
and procedures can only provide reasonable assurance of achieving their control objectives. Based on management’s evaluation of the design and
effectiveness of the Company’s disclosure controls and procedures, the Company’s Chief Executive Of(cid:2) cer and Chief Financial Of(cid:2) cer have concluded
that these controls and procedures are designed and operating effectively as of December 25, 2011 to provide reasonable assurance that the information
being disclosed is recorded, summarized and reported as required.
Internal controls over (cid:2) nancial reporting
Management is responsible for establishing and maintaining adequate internal controls over (cid:2) nancial reporting to provide reasonable assurance regarding
the reliability of (cid:2) nancial reporting and the preparation of (cid:2) nancial statements for external purposes in accordance with Canadian generally accepted
accounting principles. Internal control systems, no matter how well designed, have inherent limitations and therefore can only provide reasonable
assurance as to the effectiveness of internal controls over (cid:2) nancial reporting, including the possibility of human error and the circumvention or overriding
of the controls and procedures. Management used the Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) as the control framework in designing its internal controls over (cid:2) nancial reporting. Based on management’s design
and testing of the effectiveness of the Company’s internal controls over (cid:2) nancial reporting, the Company’s Chief Executive Of(cid:2) cer and Chief Financial
Of(cid:2) cer have concluded that these controls and procedures are designed and operating effectively as of December 25, 2011 to provide reasonable
assurance that the (cid:2) nancial information being reported is materially accurate. During the fourth quarter ended December 25, 2011, there have been no
changes in the design of the Company’s internal controls over (cid:2) nancial reporting that have materially affected, or are reasonably likely to materially affect,
its internal controls over (cid:2) nancial reporting.
Other
Additional information relating to the Company is available on SEDAR at www.sedar.com, including the Annual Information Form dated February 16, 2012.
12
REPORTING
Management’s Report to the Shareholders
The accompanying consolidated (cid:2) nancial statements, management’s discussion and analysis (MD&A) and other information in the Annual Report are
the responsibility of management. The (cid:2) nancial statements have been prepared by management and include the selection of appropriate accounting
principles, judgments and estimates necessary to prepare these statements in accordance with International Financial Reporting Standards. The MD&A
and (cid:2) nancial information contained in this Annual Report are consistent with the (cid:2) nancial statements.
To provide reasonable assurance that assets are safeguarded and that relevant and reliable (cid:2) nancial information is being reported, management has
developed and maintains a system of internal controls. An integral part of the system is the requirement that employees maintain the highest standard
of ethics in their activities. Business reviews and internal audits are performed by corporate executives and an internal audit team to evaluate internal
controls, systems and procedures.
The Board of Directors, acting through the Audit Committee, is responsible for determining that management ful(cid:2) lls its responsibilities in the preparation of
(cid:2) nancial statements and MD&A, and in the (cid:2) nancial control of operations. The Audit Committee recommends to the shareholders the appointment of the
independent auditor. The Audit Committee meets regularly with (cid:2) nancial management and the independent auditor to discuss internal controls, auditing
matters and (cid:2) nancial reporting issues and presents its (cid:2) ndings to the Board. The Audit Committee reviews the consolidated (cid:2) nancial statements, MD&A
and material (cid:2) nancial announcements with management and the external auditor prior to submission to the Board for approval.
The consolidated (cid:2) nancial statements have been audited on behalf of the shareholders by the independent external auditor, PricewaterhouseCoopers
LLP, whose report follows.
B.J. Berry
President and Chief Executive Of(cid:2) cer
Winnipeg, Canada
February 16, 2012
K.P. Kuchma
Vice President and Chief Financial Of(cid:2) cer
Winnipeg, Canada
February 16, 2012
13
REPORTING
Auditor’s Report to the Shareholders
Independent Auditor’s Report
To the Shareholders of Winpak Ltd.
We have audited the accompanying consolidated (cid:2) nancial statements of Winpak Ltd. and its subsidiaries, which comprise the consolidated balance
sheets as at December 25, 2011, December 26, 2010 and December 28, 2009 and the consolidated statements of income, comprehensive income,
changes in equity, and cash (cid:3) ows for the years ended December 25, 2011 and December 26, 2010, and the related notes, which comprise a summary of
signi(cid:2) cant accounting policies and other explanatory information.
Management’s responsibility for the consolidated (cid:2) nancial statements
Management is responsible for the preparation and fair presentation of these consolidated (cid:2) nancial statements in accordance with International Financial
Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated (cid:2) nancial statements
that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated (cid:2) nancial statements based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to
obtain reasonable assurance about whether the consolidated (cid:2) nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated (cid:2) nancial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated (cid:2) nancial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the consolidated (cid:2) nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
(cid:2) nancial statements.
We believe that the audit evidence we have obtained in our audits is suf(cid:2) cient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated (cid:2) nancial statements present fairly, in all material respects, the (cid:2) nancial position of Winpak Ltd. and its subsidiaries as at
December 25, 2011, December 26, 2010 and December 28, 2009 and its (cid:2) nancial performance and its cash (cid:3) ows for the years ended December 25, 2011
and December 26, 2010 in accordance with International Financial Reporting Standards.
Chartered Accountants
Winnipeg, Canada
February 16, 2012
14
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 25, 2011 and December 26, 2010
(thousands of US dollars, except per share amounts)
Revenue
Cost of sales
Gross pro(cid:2) t
Other income (expenses)
Sales, marketing and distribution expenses
General and administrative expenses
Research and technical expenses
Pre-production expenses
Income from operations
Finance income
Finance expense
Income before income taxes
Income tax expense
Net income for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
Basic and fully diluted earnings per share - cents
Note
8
9
9
10
22
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended December 25, 2011 and December 26, 2010
(thousands of US dollars)
Net income for the year
Cash (cid:3) ow hedge (losses) gains recognized
Cash (cid:3) ow hedge gains transferred to the statement of income
Cash (cid:3) ow hedge gains transferred to property, plant and equipment
Actuarial (losses) gains on employee bene(cid:2) t plans
Income tax relating to applicable components of other comprehensive income
Other comprehensive income (loss) for the year - net of income tax
Comprehensive income for the year
8
16
10
Attributable to:
Equity holders of the Company
Non-controlling interests
2011
652,063
(464,299)
187,764
(520)
(53,043)
(26,345)
(12,606)
(240)
95,010
4,417
(3,865)
95,562
(30,653)
64,909
63,783
1,126
64,909
98
2011
64,909
(167)
(996)
(60)
(11,771)
3,990
(9,004)
55,905
54,779
1,126
55,905
2010
579,441
(406,948)
172,493
(5,244)
(49,078)
(25,501)
(13,436)
(237)
78,997
3,656
(3,557)
79,096
(22,026)
57,070
55,296
1,774
57,070
85
2010
57,070
1,033
(1,586)
-
402
191
40
57,110
55,336
1,774
57,110
See accompanying notes to consolidated (cid:2) nancial statements, including note 29(c) which reconciles amounts previously reported under Canadian GAAP
to International Financial Reporting Standards (IFRS).
15
CONSOLIDATED BALANCE SHEETS
(thousands of US dollars)
Assets
Current assets:
Cash and cash equivalents
Trade and other receivables
Income taxes receivable
Inventories
Prepaid expenses
Derivative (cid:2) nancial instruments
Non-current assets:
Property, plant and equipment
Intangible assets
Employee bene(cid:2) t plan assets
Deferred tax assets
Other receivables
Total assets
Equity and Liabilities
Current liabilities:
Trade payables and other liabilities
Provisions
Income taxes payable
Derivative (cid:2) nancial instruments
Non-current liabilities:
Employee bene(cid:2) t plan liabilities
Deferred income
Provisions
Deferred tax liabilities
Total liabilities
Equity:
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Total equity and liabilities
Note
December 25
2011
December 26
2010
December 28
2009
11
12
13
14
15
16
17
18
19
16
19
17
21
21
126,879
83,935
33
78,018
2,769
242
291,876
256,938
15,076
-
3,729
-
275,743
567,619
59,294
592
4,988
836
65,710
12,504
10,243
8,423
17,116
48,286
113,996
29,195
(426)
409,008
437,777
15,846
453,623
567,619
90,488
77,118
1,953
76,075
2,284
629
248,547
234,797
16,666
3,330
4,174
141
259,108
507,655
52,560
368
1,554
-
54,482
6,719
11,221
7,614
20,322
45,876
100,358
29,195
441
361,128
390,764
16,533
407,297
507,655
61,164
69,172
1,255
69,812
2,211
1,182
204,796
220,196
18,505
1,110
3,408
799
244,018
448,814
44,965
-
5,051
-
50,016
7,181
11,363
870
19,622
39,036
89,052
29,195
810
313,038
343,043
16,719
359,762
448,814
See accompanying notes to consolidated (cid:2) nancial statements, including note 29(b) which reconciles amounts previously reported under Canadian GAAP
to IFRS.
On behalf of the Board:
Director
Director
16
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(thousands of US dollars)
Attributable to Equity Holders of the Company
Share
Retained
Non-
Controlling
Note
Capital
Reserves
Earnings
Total
Interests
Total
Equity
Balance at December 28, 2009
29,195
810
313,038
343,043
16,719
359,762
Comprehensive income (loss) for the year
Cash (cid:3) ow hedge gains, net of tax
Cash (cid:3) ow hedge gains transferred to the statement
of income, net of tax
Actuarial gains on employee bene(cid:2) t plans, net of tax
Other comprehensive income (loss)
Net income for the year
Comprehensive income (loss) for the year
Preferred share redemption
Dividends
21
-
-
-
-
-
-
-
-
741
(1,110)
-
(369)
-
(369)
-
-
409
409
55,296
55,705
741
(1,110)
409
40
55,296
55,336
-
-
-
-
1,774
1,774
-
-
-
-
(1,960)
(7,615)
(7,615)
-
741
(1,110)
409
40
57,070
57,110
(1,960)
(7,615)
Balance at December 26, 2010
29,195
441
361,128
390,764
16,533
407,297
Balance at December 27, 2010
29,195
441
361,128
390,764
16,533
407,297
Comprehensive income (loss) for the year
Cash (cid:3) ow hedge losses, net of tax
Cash (cid:3) ow hedge gains transferred to the statement
of income, net of tax
Cash (cid:3) ow hedge gains transferred to property, plant and
equipment, net of tax
Actuarial losses on employee bene(cid:2) t plans, net of tax
Other comprehensive income (loss)
Net income for the year
Comprehensive income (loss) for the year
Preferred share redemption
Dividends
21
-
-
-
-
-
-
-
-
-
(109)
(714)
(44)
-
(867)
-
(867)
-
-
-
-
-
(8,137)
(8,137)
63,783
55,646
(109)
(714)
(44)
(8,137)
(9,004)
63,783
54,779
-
-
(7,766)
(7,766)
-
-
-
-
-
1,126
1,126
(980)
(833)
(109)
(714)
(44)
(8,137)
(9,004)
64,909
55,905
(980)
(8,599)
Balance at December 25, 2011
29,195
(426)
409,008
437,777
15,846
453,623
See accompanying notes to consolidated (cid:2) nancial statements.
17
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 25, 2011 and December 26, 2010
(thousands of US dollars)
Cash provided by (used in):
Operating activities:
Net income for the year
Items not involving cash:
Depreciation
Amortization - deferred income
Amortization - intangible assets
Employee de(cid:2) ned bene(cid:2) t plan expenses
Net (cid:2) nance income
Income tax expense
Other
Cash (cid:3) ow from operating activities before the following
Change in working capital:
Trade and other receivables
Inventories
Prepaid expenses
Trade payables and other liabilities
Provisions
Employee de(cid:2) ned bene(cid:2) t plan payments
Income tax paid
Interest received
Interest paid
Net cash from operating activities
Investing activities:
Acquisition of property, plant and equipment (net)
Acquisition of intangible assets
Financing activities:
Dividends paid
Change in non-controlling interests in subsidiary
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Note
2011
2010
64,909
26,789
(1,223)
2,049
2,928
(552)
30,653
(1,433)
124,120
(6,676)
(1,943)
(485)
6,756
795
(5,148)
(22,347)
309
(20)
95,361
(48,906)
(462)
(49,368)
(7,789)
(1,813)
(9,602)
36,391
90,488
126,879
57,070
25,061
(1,154)
2,091
2,537
(99)
22,026
(2,348)
105,184
(7,946)
(6,263)
(73)
8,099
7,112
(4,750)
(23,377)
116
(10)
78,092
(39,017)
(252)
(39,269)
(7,539)
(1,960)
(9,499)
29,324
61,164
90,488
14
15
16
9
10
16
15
11
See accompanying notes to consolidated (cid:2) nancial statements, including note 29(d) which highlights the signi(cid:2) cant adjustments made to the amounts
previously reported under Canadian GAAP.
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(thousands of US dollars, unless otherwise indicated)
1. General
Winpak Ltd. is incorporated under the Canada Business Corporations Act. The Company manufactures and distributes high-quality packaging materials
and related packaging machines. The Company’s products are used primarily for the packaging of perishable foods, beverages and in health-care
applications. The address of the Company’s registered of(cid:2) ce is 100 Saulteaux Crescent, Winnipeg, Manitoba, Canada R3J 3T3. The ultimate controlling
party of Winpak Ltd. is Wihuri Oy of Helsinki, Finland, a privately held Company.
2. Basis of presentation
The Company prepares its consolidated (cid:2) nancial statements in accordance with Canadian generally accepted accounting principles as set out in Part 1 of
the Handbook of the Canadian Institute of Chartered Accountants (CICA). The (cid:2) scal year of the Company ends on the last Sunday of the calendar year.
As a result, the Company’s (cid:2) scal year is usually 52 weeks in duration, but includes a 53rd week every (cid:2) ve to six years. The 2011 and 2010 (cid:2) scal years
comprised 52 weeks. In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (IFRS), and require publicly
accountable enterprises to apply such standards for years beginning on or after January 1, 2011. The Company’s current (cid:2) scal year commenced on
December 27, 2010. As permitted under National Instrument 52-107, the Company elected to commence reporting on this new basis for the year ended
December 25, 2011. In these (cid:2) nancial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption of IFRS.
These consolidated (cid:2) nancial statements were the (cid:2) rst prepared in accordance with IFRS. Accordingly, IFRS 1 has been applied. Subject to certain
transition elections disclosed in note 29, the Company has consistently applied the same accounting policies in its opening IFRS balance sheet at
December 28, 2009 and throughout all periods presented, as if these policies had always been in effect. Note 29 discloses the impact of the transition to
IFRS on the Company’s reported balance sheet, changes in equity, statements of income, comprehensive income and cash (cid:3) ows, including the nature
and effect of signi(cid:2) cant changes in accounting policies from those used in the Company’s Canadian GAAP consolidated (cid:2) nancial statements for the year
ended December 26, 2010.
The Company’s functional and reporting currency is the US dollar. The US dollar is the reporting currency as more than three-quarters of the Company’s
business is conducted in US dollars thereby increasing transparency by signi(cid:2) cantly reducing volatility of reported results due to (cid:3) uctuations in the rate of
exchange between the US and Canadian currencies. As part of the Company’s conversion to IFRS, entities with the Canadian dollar as their functional
currency under Canadian GAAP changed their functional currency to the US dollar (see note 29).
The consolidated (cid:2) nancial statements have been prepared under the historical-cost convention, except that certain (cid:2) nancial instruments, employee
bene(cid:2) t plans, share-based payments and provisions are stated at their fair value.
The consolidated (cid:2) nancial statements were approved by the Board of Directors on February 16, 2012.
3. Signi(cid:2) cant accounting policies
(a) Principles of consolidation:
The consolidated (cid:2) nancial statements include the accounts of the Company, its wholly-owned subsidiaries: Winpak Portion Packaging Ltd., Winpak
Heat Seal Packaging Inc., Winpak Holdings Ltd., Winpak Inc., Winpak Films Inc., Winpak Portion Packaging, Inc., Winpak Lane, Inc., Winpak Heat Seal
Corporation, Grupo Winpak De Mexico, S.A. De C.V., Embalajes Winpak De Mexico, S.A. De C.V., and Administracion Winpak De Mexico, S.A. De C.V.,
and its majority-owned subsidiary American Biaxis Inc. Subsidiaries are entities controlled by the Company. Control exists when the Company has the
power to govern the (cid:2) nancial and operating policies so as to obtain bene(cid:2) ts from its activities. In assessing control, potential voting rights that presently
are exercisable or convertible are taken into account. Subsidiaries are fully consolidated from the date on which control is obtained until the date that
control ceases. The (cid:2) nancial statements of all subsidiaries are prepared as of the same reporting date using consistent accounting policies. All inter-
company balances and transactions, including any unrealized pro(cid:2) ts arising from inter-company transactions have been eliminated.
(b) Business combinations:
Business combinations are accounted for using the acquisition method of accounting. The consideration transferred for the acquisition of a subsidiary is
the fair values of the assets transferred, the liabilities incurred by the former owners of the acquiree and the equity interests issued by the Company. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition costs incurred
are expensed and included in general and administrative expenses. Any contingent consideration to be transferred by the acquirer will be recognized at
fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be
recognized in accordance with IAS 39 either in the statement of income or as a change to other comprehensive income. Contingent consideration that is
classi(cid:2) ed as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Identi(cid:2) able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date, irrespective of the extent of any non-controlling interest. Goodwill is initially measured as the excess of the aggregate of the
consideration transferred over the net identi(cid:2) able assets acquired and liabilities assumed. If this consideration is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognized directly in the statement of income.
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(c) Non-controlling interests:
Non-controlling interests represent equity interests in American Biaxis Inc. owned by third parties. The share of net assets attributable to non-controlling
interests is presented as a component of equity. Their share of net income and other comprehensive income is recognized directly in equity.
(d) Foreign currency translation:
The (cid:2) nancial statements for the Company and its subsidiaries are prepared using their functional currency, that being the US dollar. The functional
currency is the currency of the primary economic environment in which the Company and its subsidiaries operate. Foreign currency transactions are
translated into the functional currency using exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Foreign currency differences arising
on translation are recognized directly to the statement of income. Non-monetary assets and liabilities arising from transactions in foreign currencies are
translated to the functional currency at the exchange rate prevailing at the date of the transaction.
(e) Revenue:
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, rebates and discounts. Revenue
is recognized when the risks and rewards of ownership have transferred to the customer. No revenue is recognized if there are signi(cid:2) cant uncertainties
regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured reliably, or there is continuing management
involvement with the goods.
(f) Research and technical expenses:
Research and technical expenses are expensed in the period in which the costs are incurred.
(g) Government grants:
Grants from government are recognized at their fair value when there is a reasonable assurance that the grant will be received and/or earned and any
speci(cid:2) ed conditions will be met.
Grants received in relation to the purchase and construction of plant and equipment are included in non-current liabilities as deferred income and are
credited to the statement of income on a straight-line basis over the estimated useful life of the related asset. Grants received in relation to research and
development activities are recorded to reduce these costs when it is determined there is reasonable assurance the tax credits will be realized.
(h) Leases:
Rental income received from packaging machine operating leases is recognized on a straight-line basis over the term of the corresponding lease.
Payments made under operating leases are recognized in the statement of income on a straight-line basis over the term of the lease, while any lease
incentive received is recognized as a reduction of the total lease expense, over the term of the lease.
Inventories:
(i)
Inventories are stated at the lower of cost and net realizable value. The cost of inventories is based on the (cid:2) rst-in (cid:2) rst-out principle and includes
expenditures incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories,
cost includes an appropriate share of variable and (cid:2) xed overheads based on normal operating capacity. Any excess, unallocated, (cid:2) xed overhead costs
are expensed as incurred. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and selling expenses.
(j) Cash and cash equivalents:
Cash and cash equivalents include cash on hand, cash invested in interest-bearing money market accounts and short-term deposits with maturities of
less than three months. Cash equivalents are all highly liquid investments. Bank overdrafts are shown within current liabilities. Bank overdrafts that are
repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash (cid:3) ows.
(k) Property, plant and equipment:
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. All costs directly attributable to
bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management are included in the
carrying value of the asset. When the Company has a legal right or constructive obligation to restore a site on which an asset is located either through
make-good provisions in lease agreements or decommissioning of environmental risks, the present value of the estimated costs of dismantling and
removing the asset and restoring the site are included in the carrying value of the asset with a corresponding increase to provisions. Borrowing costs
directly attributable to the acquisition, construction or production of qualifying property, plant and equipment that takes an extended period of time to be
placed into service are added to the cost of the assets, until such time as the assets are substantially ready for their intended use. See note 3(o) on
impairment.
When parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components). The cost of
replacing a component of an item of plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic bene(cid:2) ts
of the item will occur and its cost can be measured reliably. The costs of day-to-day maintenance of plant and equipment are recognized directly in the
statement of income.
20
Depreciation is computed using the straight-line method over the estimated useful lives of the assets, commencing the date the assets are ready for use
as follows:
Buildings 20 - 40 years
Equipment 4 - 20 years
Packaging machines 3 - 7 years
Depreciation methods, useful lives and residual values are reassessed annually or more frequently when there is an indication that they have changed.
The gain or loss on the retirement of an item of property, plant and equipment is the difference between the net sale proceeds and the carrying amount of
the asset and is recognized in the statement of income.
(l) Pre-production expenses:
Pre-production costs relating to installations of major new production equipment are expensed in the period in which occurred.
(m) Intangible assets:
Intangible assets are stated at cost less accumulated amortization and accumulated impairment losses. See note 3(o) on impairment. Computer software
that is integral to a related item of hardware is included with plant and equipment. All other computer software is treated as an intangible asset. The
cost of intangible assets acquired in an acquisition is the fair value at the acquisition date. The cost of separately acquired intangible assets, including
computer software, comprises the purchase price and any directly attributable costs of preparing the asset for use. Amortization is computed using the
straight-line method over the estimated useful lives of the assets, as follows:
Patents 8 - 17 years
Customer-related 10 years
Marketing-related 2 - 10 years
Computer software 3 - 12 years
(n) Goodwill:
Goodwill represents the excess of the consideration transferred over the Company’s interest in the fair value of the net identi(cid:2) able assets, including
intangible assets, and liabilities of the acquiree at the date of acquisition. At the date of acquisition, goodwill is allocated to cash-generating units (CGUs)
for the purpose of impairment testing. A CGU is the smallest group of assets that generates cash in(cid:3) ows that are largely independent of the cash in(cid:3) ows
from other assets or groups of assets. Goodwill is tested at least annually for impairment at the CGU level and is carried at cost less accumulated
impairment losses (see note 3(o)).
Impairment:
(o)
The carrying amount of the Company’s property, plant and equipment and intangible assets (other than goodwill) are reviewed at each reporting date to
determine whether there is any indication of impairment. Goodwill is tested for impairment annually or at any time if an indicator of impairment exists. If
any such indication exists, the applicable asset’s recoverable amount is estimated.
The recoverable amount of the Company’s assets are calculated as the value-in-use, being the present value of future cash (cid:3) ows, using a pre-tax discount
rate that re(cid:3) ects the current assessment of the time value of money, or the fair value less costs to sell, if greater. For an asset that does not generate
largely independent cash (cid:3) ows, the recoverable amount is determined for the CGU to which it belongs. The Company bases its impairment calculation on
detailed (cid:2) nancial forecasts, which are prepared separately for each of the Company’s CGUs to which the individual assets are allocated. These (cid:2) nancial
forecasts are generally covering a period of (cid:2) ve years. For longer periods, a long-term growth rate is calculated and applied to project future cash (cid:3) ows
after the (cid:2) fth year.
An impairment loss is recognized whenever the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses are
recognized in the statement of income. Impairment losses recognized in respect of CGUs are allocated (cid:2) rst to reduce the carrying amount of any goodwill
allocated to the CGU and then, to reduce the carrying amount of other assets in the CGU on a pro rata basis.
Impairment losses in respect of goodwill are not reversed. In respect of property, plant and equipment and intangible assets, an impairment loss is
reversed if there has been an indication that an impairment loss recognized in prior periods may no longer exist or may have decreased. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been previously recognized.
(p) Employee bene(cid:2) t plans:
The Company maintains (cid:2) ve funded non-contributory de(cid:2) ned bene(cid:2) t pension plans in Canada and the US and one funded non-contributory supplementary
income postretirement plan for certain CDN-based executives. A market discount rate is used to measure the bene(cid:2) t obligations based on the yield
of high quality corporate bonds denominated in the same currency in which the bene(cid:2) ts are expected to be paid and with terms to maturity that, on
average, match the terms of the bene(cid:2) t obligations. The cost of providing the bene(cid:2) ts is actuarially determined using the projected unit credit method.
Actuarial valuations are conducted, at a minimum, on a triennial basis with interim valuations performed as deemed necessary. Consideration is given
to any event that could impact the bene(cid:2) t plan assets or obligation up to the balance sheet date where interim valuations are performed. For (cid:2) nancial
reporting purposes, the Company measures the bene(cid:2) t obligations and fair value of assets for the de(cid:2) ned bene(cid:2) t plans as of the year-end date. Current
service costs are charged to the statement of income and included in the same line items as the related compensation cost. Interest costs on the bene(cid:2) t
obligation are charged to the statement of income as (cid:2) nance expense. Likewise, the expected return on bene(cid:2) t plan assets is presented in the statement
21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
of income as (cid:2) nance income. Actuarial gains and losses are recognized directly in equity within other comprehensive income. Gains and losses on
the curtailment or settlement of a plan are recognized in the statement of income when the Company is demonstrably committed to the curtailment or
settlement. Past service costs are recognized immediately in the statement of income to the extent that the bene(cid:2) ts are already vested, and are otherwise
amortized on a straight-line basis over the average period until the amended bene(cid:2) ts become vested. The amount recognized in the balance sheet at
each year-end reporting date represents the present value of the bene(cid:2) t obligation, adjusted for unrecognized past service costs, and reduced by the fair
value of bene(cid:2) t plan assets. Any recognized asset or surplus is limited to the present value of economic bene(cid:2) ts available in the form of any future refunds
from the plan or reductions in future contributions. To the extent that there is uncertainty regarding entitlement to the surplus, no asset is recorded. The
Company’s funding policy is in compliance with statutory regulations and amounts funded are deductible for income tax purposes.
One of the Company’s subsidiaries maintains one unfunded contributory de(cid:2) ned bene(cid:2) t postretirement plan for health care bene(cid:2) ts for a limited group of
US individuals. A market discount rate is used to measure the bene(cid:2) t obligation based on the yield of high quality corporate bonds denominated in the
same currency in which the bene(cid:2) ts are expected to be paid and with terms to maturity that, on average, match the terms of the bene(cid:2) t obligation. The
cost of providing the bene(cid:2) ts is actuarially determined using the per capita claims cost method. Current service costs are charged to the statement of
income as they accrue and are included in general and administrative expenses. Interest costs on the bene(cid:2) t obligation are charged to the statement
of income as (cid:2) nance expense. Actuarial gains and losses are recognized directly in equity within other comprehensive income. Past service costs are
recognized immediately to the extent that the bene(cid:2) ts are already vested, and are otherwise amortized on a straight-line basis over the average period
until the amended bene(cid:2) ts become vested. The amount recognized in the balance sheet at each year-end reporting date represents the present value
of the bene(cid:2) t obligation, adjusted for unrecognized past service costs.
The Company participates in one multiemployer de(cid:2) ned bene(cid:2) t pension plan providing bene(cid:2) ts to certain unionized employees in the US. The
administration of the plan and investment of its assets are controlled by a board of independent trustees. The Company’s responsibility to make
contributions is the amount established pursuant to its collective agreement; however poor performance of the investments in this plan could have an
adverse impact on the Company, its employees and former employees who are members of this plan. This multiemployer de(cid:2) ned bene(cid:2) t pension plan
is accounted for using the accounting standards for de(cid:2) ned contribution plans as there is insuf(cid:2) cient information to apply de(cid:2) ned bene(cid:2) t pension plan
accounting. Accordingly, the Company’s pension expense charged to the statement of income is the annual funding contribution and the Company
does not re(cid:3) ect its share of a plan surplus or de(cid:2) cit. The cost of withdrawing from the plan is charged to the statement of income and is calculated as
the present value of the required future cash out(cid:3) ows. For further information on the Company’s withdrawal from the plan, refer to notes 19 and 29(b).
Changes in estimates with respect to the withdrawal liability are recorded to the statement of income.
The Company maintains seven de(cid:2) ned contribution pension plans in Canada and the US. The pension expense charged to the statement of income for
these plans is the annual funding contribution by the Company.
Termination bene(cid:2) ts are recognized as an expense in the statement of income when the Company is committed to a formal detailed plan to either
terminate employment before the normal retirement date or to provide termination bene(cid:2) ts as a result of an offer made to encourage voluntary redundancy.
Termination bene(cid:2) ts for voluntary redundancies are recognized as an expense in the statement of income if the Company has made an offer of voluntary
redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Short-term bene(cid:2) t obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the
amount expected to be paid under short-term cash bonus or pro(cid:2) t-sharing plans if the Company has a legal or constructive obligation to pay this amount
as a result of past service provided by the employee.
Income taxes:
(q)
Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of income except to the extent that it relates
to items recorded directly to other comprehensive income or equity, in which case it is recognized directly in other comprehensive income or equity,
respectively.
Current income tax expense is the expected income tax payable on the taxable income for the period, using income tax rates enacted or substantively
enacted in the jurisdictions the Company is required to pay income tax at the reporting date, and any income adjustments to income taxes payable in
respect of previous periods. Current income tax expense is adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the (cid:2) nancial statements, and by the availability of unused income tax losses.
Deferred tax expense is recognized using the balance sheet method in which temporary differences are calculated based on the carrying amounts
of assets and liabilities for (cid:2) nancial reporting purposes and the tax bases of assets and liabilities for income taxation purposes. Deferred tax is not
recognized for the following temporary timing differences: the initial recognition for both goodwill and assets and liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable income; and differences relating to investments in subsidiaries to the extent that it
is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the income tax rates that are expected to be applied when
the temporary difference reverses, that is, when the asset is realized or the liability is settled, based on the income tax laws that have been enacted or
substantively enacted at the reporting date.
22
Deferred tax assets are recognized only to the extent that it is probable that future taxable income will be available against which the assets can be
utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related income tax
bene(cid:2) t will be realized.
Current tax assets and liabilities are offset when the Company and its subsidiaries have a legally enforceable right to offset the amounts and intend to
either settle on a net basis, or to realize the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balance
on a net basis.
Management periodically evaluates positions taken in income tax returns with respect to situations in which applicable income tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to income tax authorities.
(r) Provisions:
A provision is recognized when there is a legal or constructive obligation as a result of a past event and it is probable that a future outlay of cash will be
required to settle the obligation, and the amount can be reliably estimated. Provisions are determined by discounting the expected future cash (cid:3) ows at a
pre-income tax rate that re(cid:3) ects the current market assessments of the time value of money and the risks speci(cid:2) c to the obligation. When some or all of
the monies required to settle a provision are expected to be recovered from a third party, the recovery is recognized as an asset when it is virtually certain
that the recovery will be received.
When the Company has a legal right or constructive obligation to restore a site on which an asset is located either through make-good provisions in lease
agreements or decommissioning of environmental risks, the present value of the estimated costs of dismantling and removing the asset and restoring the
site is recognized as a provision with a corresponding increase to the related item of property, plant and equipment. At each reporting date, the obligation
is re-measured in line with changes in discount rates, estimated cash (cid:3) ows and the timing of those cash (cid:3) ows. Any changes in the obligation are added
or deducted from the related asset. The change in the present value of the obligation due to the passage of time is recognized as a (cid:2) nance expense in
the statement of income.
At each reporting date, other provisions are re-measured in line with changes in discount rates, estimated cash (cid:3) ows and the timing of those cash (cid:3) ows.
Any changes in the provision are recognized in the statement of income. The change in the present value of the provision due to the passage of time is
recognized as a (cid:2) nance expense in the statement of income.
(s) Financial assets and liabilities:
Derivative (cid:2) nancial instruments are measured at fair value, even when they are part of a hedging relationship. The Company’s (cid:2) nancial instruments are
classi(cid:2) ed as follows: a) cash and cash equivalents - loans and receivables, b) trade and other receivables - loans and receivables c) trade payables and
other liabilities - other (cid:2) nancial liabilities and d) derivative (cid:2) nancial instruments - derivatives designated as effective hedges. All (cid:2) nancial instruments,
including derivatives, are included in the consolidated balance sheet and are measured at fair value except loans and receivables and other (cid:2) nancial
liabilities, which are measured at amortized cost. All changes in fair value are recorded to the statement of income unless cash (cid:3) ow hedge accounting is
used, in which case changes in fair value are recorded in other comprehensive income to the extent the derivatives are deemed to be effective hedges.
(t) Derivative (cid:2) nancial instruments:
The Company operates principally in Canada and the United States, which gives rise to risks that its income and cash (cid:3) ows may be adversely impacted
by (cid:3) uctuations in foreign exchange rates. The Company enters into foreign currency forward contracts to manage foreign exchange exposures on
anticipated labor, overhead, and property, plant and equipment expenditures to be incurred in Canadian dollars and equipment expenditures to be
incurred in other foreign currencies.
All foreign currency forward contracts are designated as cash (cid:3) ow hedges. The fair value of each contract is included on the balance sheet within
derivative (cid:2) nancial instrument assets or liabilities, depending on whether the fair value was in an asset or liability position. In the case of labor and
overhead expenditures, changes in the fair value of these contracts are initially recorded in other comprehensive income and subsequently recorded in
the statement of income when the hedged item affects income or loss. In the case of property, plant and equipment expenditures, changes in the fair
value of these contracts are initially recorded in other comprehensive income and upon settlement of the contract, the gain or loss is included in the cost
of the corresponding asset.
(u) Share-based payments:
The Company maintains a share-based compensation plan, which provides restricted share units under the President’s Incentive Plan. Units under the
plan vest immediately, and are paid in cash during the fourth quarter of the third year or the (cid:2) rst quarter of the fourth year after the date of grant based upon
the quoted market value of the common shares of the Company on the day prior to the date of payment. The fair value of the units granted is recognized
as a personnel expense, with a corresponding increase in liabilities, over the period that the units pertain. The liability is re-measured at each reporting
date. Any changes in the fair value of the liability are recognized as a personnel expense in the statement of income.
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(v) Earnings per share:
Basic earnings per share are calculated by dividing the net income attributable to equity holders of the Company for the period by the weighted average
number of common shares outstanding during the period. Fully diluted earnings per share are calculated on the same basis as there are no potentially
dilutive common shares.
4. Critical accounting estimates and judgments
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by de(cid:2) nition, seldom equal the actual
results. The estimates and assumptions that are critical to the determination of carrying value of assets and liabilities are addressed below.
Impairment of property, plant and equipment and intangible assets:
(a)
An integral component of impairment testing is determining the asset’s recoverable amount. The determination of the recoverable amount involves
signi(cid:2) cant management judgment, including projections of future cash (cid:3) ows and appropriate discount rates. The cash (cid:3) ows are derived from the (cid:2) nancial
forecast for the next (cid:2) ve years and do not include restructuring activities that the Company is not yet committed to or signi(cid:2) cant future investments that will
enhance the asset’s performance of the CGU being tested. Qualitative factors, including market presence and trends, strength of customer relationships,
strength of local management, strength of debt and capital markets, and degree of variability in cash (cid:3) ows, as well as other factors, are considered when
making assumptions with regard to future cash (cid:3) ows and the appropriate discount rate. The recoverable amount is most sensitive to the discount rate
used for the discounted cash (cid:3) ow model as well as the expected future cash in(cid:3) ows and the growth rate used for extrapolation purposes. A change in
any of the signi(cid:2) cant assumptions or estimates could result in a material change in the recoverable amount.
The Company has eight CGUs, of which the carrying values for two include goodwill and must be tested for impairment annually.
(b) Employee bene(cid:2) t plans:
Accounting for employee bene(cid:2) t plans requires the use of actuarial assumptions. The assumptions include the discount rate, expected rate of return on
bene(cid:2) t plan assets, rate of compensation increase and health care costs. These assumptions depend on underlying factors such as economic conditions,
government regulations, investment performance, employee demographics and mortality rates. These assumptions could change in the future and may
result in material adjustments to employee bene(cid:2) t plan assets or liabilities.
5. Future accounting standards
(a) Financial instruments - disclosures:
The Accounting Standards Board approved the incorporation of the amendments to IFRS 7 “Financial Instruments: Disclosures” and the related
amendments to IFRS 1 “First-time Adoption of International Financial Reporting Standards” into Part 1 of the Handbook. These amendments were made
to Part 1 in January 2011 and are effective for annual periods beginning on or after July 1, 2011. The amendments relate to required disclosures for
transfers of (cid:2) nancial assets to help users of (cid:2) nancial statements evaluate the risk exposures relating to such transfers and the effect of those risks on an
entity’s (cid:2) nancial position. While the Company is currently assessing the impact of this new standard, management does not expect the standard to have
a signi(cid:2) cant impact on the Company’s consolidated (cid:2) nancial statements.
(b) Financial instruments:
IFRS 9 “Financial Instruments” was issued in November 2009 as the (cid:2) rst step in the project to replace IAS 39. IFRS 9 retains but simpli(cid:2) es the mixed
measurement model and establishes two primary measurement categories for (cid:2) nancial assets: amortized cost and fair value. The basis of classi(cid:2) cation
depends on an entity’s business model and the contractual cash (cid:3) ow of the (cid:2) nancial asset. Classi(cid:2) cation is made at the time the (cid:2) nancial asset is initially
recognized, namely when the entity becomes a party to the contractual provisions of the instrument. IFRS 9 is effective for annual periods beginning on
or after January 1, 2015. While the Company is currently assessing the impact of this new standard, management does not expect the standard to have
a signi(cid:2) cant impact on the Company’s consolidated (cid:2) nancial statements.
In May 2011, the International Accounting Standards Board issued the following standards: IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint
Arrangements”, IFRS 12 “Disclosure of Interests in Other Entities”, IAS 27 “Separate Financial Statements”, IFRS 13 “Fair Value Measurement” and
amended IAS 28 “Investments in Associates and Joint Ventures”. Each of the new standards is effective for annual periods beginning on or after January
1, 2013 with early adoption permitted. While the Company is currently assessing the impact of the new and amended standards, management does not
expect the standards to have a signi(cid:2) cant impact on the Company’s consolidated (cid:2) nancial statements. The Company has not yet determined whether
any of the new requirements will be early adopted.
The following is a brief summary of the new standards:
(c) Consolidation:
IFRS 10 “Consolidated Financial Statements” requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required
when an entity has the power to govern the (cid:2) nancial and operating policies of an entity so as to obtain bene(cid:2) ts from its activities. IFRS 10 replaces SIC
12 “Consolidation – Special Purpose Entities” and parts of IAS 27 “Consolidated and Separate Financial Statements”.
24
(d) Joint arrangements:
IFRS 11 “Joint Arrangements” requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operations. Joint ventures will be
accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue
and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interests in joint
ventures. IFRS 11 supersedes IAS 31 “Interests in Joint Ventures” and SIC 13 “Jointly Controlled Entities - Non-monetary Contributions by Venturers”.
(e) Disclosure of interests in other entities:
IFRS 12 “Disclosure of Interests in Other Entities” establishes disclosure requirements for interests in other entities, such as joint arrangements,
associates, special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces signi(cid:2) cant
additional disclosure requirements that address the nature of, and risks associated with, an entity’s interests in other entities.
(f) Fair value measurement:
IFRS 13 “Fair Value Measurement” is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS
standards. The new standard clari(cid:2) es that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly
transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS,
guidance on measuring and disclosing fair value is dispersed among the speci(cid:2) c standards requiring fair value measurements and in many cases does
not re(cid:3) ect a clear measurement basis or consistent disclosures.
(g) Amendments to other standards:
There have been amendments to existing standards, including IAS 27 “Separate Financial Statements” and IAS 28 “Investments in Associates and Joint
Ventures”. IAS 27 addresses accounting for subsidiaries, jointly controlled entities and associates in non-consolidated (cid:2) nancial statements. IAS 28 has
been amended to include joint ventures in its scope and to address the changes in IFRS 10 - 12 as explained above.
In June 2011, the International Accounting Standards Board amended IAS 1 “Financial Statement Presentation” and IAS 19 “Employee Bene(cid:2) ts”.
(h) Financial statement presentation:
The amendments to IAS 1 “Financial Statement Presentation” requires entities to separate items presented in other comprehensive income into two
groups, based on whether or not they may be recycled to the statement of income in the future. Items that will not be recycled such as re-measurements
resulting from amendments to IAS 19 will be presented separately from items that may be recycled in the future, such as deferred gains and losses on
cash (cid:3) ow hedges. Entities that presented other comprehensive income items before tax will be required to show the amount of tax related to the two
groups separately. The amendment is effective for annual periods beginning on or after July 1, 2012. Early adoption is permitted and full retrospective
application is required. The Company has not yet determined whether the amended standard will be early adopted.
(i) Employee bene(cid:2) ts:
The amendments to IAS 19 “Employee Bene(cid:2) ts” makes signi(cid:2) cant changes to the recognition and measurement of de(cid:2) ned bene(cid:2) t pension expense and
termination bene(cid:2) ts, and to the disclosure for all employee bene(cid:2) ts. Actuarial gains and losses are renamed re-measurements and will be recognized
immediately in other comprehensive income. Re-measurements recognized in other comprehensive income will not be recycled through the statement
of income in subsequent periods. The amendments also accelerate the recognition of past service costs whereby they are recognized in the period of a
plan amendment. The annual expense for a de(cid:2) ned bene(cid:2) t plan will be computed based on the application of the discount rate to the net de(cid:2) ned bene(cid:2) t
plan asset or liability. The amendments to IAS 19 will also impact the presentation of pension expense as bene(cid:2) t costs will be split between (i) the cost
of bene(cid:2) ts accrued in the current period (service cost) and bene(cid:2) t changes (past service cost, settlements and curtailments); and (ii) (cid:2) nance expense or
income. The amendment is effective for periods beginning on or after January 1, 2013. Early adoption is permitted. The amendment should be applied
retrospectively, except for changes to the carrying value of assets that include bene(cid:2) t costs in the carrying amount. The Company has not yet begun the
process of assessing what impact the amended standard may have on its (cid:2) nancial statements or whether or not it will early adopt.
(j) Financial instruments - presentation:
In December 2011, the International Accounting Standards Board issued an amendment to the application guidance in IAS 32 “Financial Instruments:
Presentation” to clarify some of the requirements for offsetting (cid:2) nancial assets and (cid:2) nancial liabilities on the statement of (cid:2) nancial position. As a result,
the International Accounting Standards Board has also published an amendment to IFRS 7 “Financial Instruments: Disclosures”. The amendments do not
change the current offsetting model in IAS 32 but instead clari(cid:2) es that the right of offset must not be contingent on a future event. It also must be legally
enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendments also
clarify that gross settlement mechanisms with features that both (i) eliminate credit and liquidity risk and (ii) process receivables and payables in a single
settlement process, are effectively equivalent to net settlement. The offsetting disclosures in IFRS 7 are to be retrospectively applied, with an effective
date for annual periods beginning on or after January 1, 2013. However, the clari(cid:2) cations to the application guidance in IAS 32 are to be retrospectively
applied, with an effective date for annual periods beginning on or after January 1, 2014. While the Company is currently assessing the impact of this new
standard, management does not expect the standard to have a signi(cid:2) cant impact on the Company’s consolidated (cid:2) nancial statements.
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Expenses by nature:
Raw materials and consumables used
Depreciation and amortization
Personnel expenses (note 7)
Freight
Other expenses
Net foreign exchange and cash (cid:3) ow hedge gains transferred from other comprehensive income (note 8)
7. Personnel expenses:
Wages and salaries
Social security expenses
Expenses related to de(cid:2) ned bene(cid:2) t plans
Contribution to de(cid:2) ned contribution plans and de(cid:2) ned bene(cid:2) t multiemployer pension plan
Withdrawal liability expense on de(cid:2) ned bene(cid:2) t multiemployer pension plan
Share-based payments
8. Other income (expenses):
Foreign exchange (loss) gain
Cash (cid:3) ow hedge gains transferred from other comprehensive income
Withdrawal liability expense on de(cid:2) ned bene(cid:2) t multiemployer pension plan
9. Finance income and expense:
Finance income on cash and cash equivalents
Expected return on bene(cid:2) t plan assets
Finance income
Finance expense on bank overdrafts and other
Finance expense on bene(cid:2) t plan obligation
Unwinding of discount rates on provisions
Finance expense
Net (cid:2) nance income
2011
(337,074)
(27,615)
(138,661)
(17,750)
(36,228)
275
(557,053)
2011
(119,742)
(11,120)
(2,928)
(3,115)
(795)
(961)
2010
(288,985)
(25,998)
(137,495)
(16,558)
(33,276)
1,868
(500,444)
2010
(113,355)
(10,340)
(2,537)
(2,840)
(7,112)
(1,311)
(138,661)
(137,495)
2011
(721)
996
(795)
(520)
2011
328
4,089
4,417
(48)
(3,579)
(238)
(3,865)
552
2010
282
1,586
(7,112)
(5,244)
2010
182
3,474
3,656
(12)
(3,545)
-
(3,557)
99
26
10. Income tax expense:
Current tax expense
Current year
Adjustment for prior years
Deferred tax expense
Origination and reversal of temporary differences
Change in enacted or substantively enacted tax rates
2011
2010
(29,424)
-
(29,424)
(1,229)
-
(1,229)
(22,744)
87
(22,657)
418
213
631
Total income tax expense
(30,653)
(22,026)
Income tax recovery recognized in other comprehensive income
Cash (cid:3) ow hedges
Actuarial gains and losses
Reconciliation of effective income tax rate
Combined Canadian federal and provincial income tax rate
United States income taxed at rates higher than Canadian tax rates
Change in enacted or substantively enacted Canadian provincial income tax rates
Non-taxable foreign exchange differences
Capital cost allowance and cumulative eligible capital tax pool foreign exchange differences
Permanent differences and other
Effective income tax rate
Effective January 1, 2011, the Canadian federal income tax rate dropped from 18 percent to 16.5 percent.
356
3,634
3,990
28.2%
4.5
-
-
-
(0.6)
32.1%
184
7
191
29.8%
1.4
(0.3)
(2.4)
(0.9)
0.2
27.8%
11. Cash and cash equivalents:
Bank balances
Money market and short-term deposits
12. Trade and other receivables:
Trade receivables
Less: Allowance for doubtful accounts
Net trade receivables
Other receivables
December 25
December 26
December 28
2011
17,320
109,559
126,879
2010
12,118
78,370
90,488
2009
21,783
39,381
61,164
December 25
2011
81,811
(1,446)
80,365
3,570
83,935
December 26
2010
December 28
2009
74,861
(1,628)
73,233
3,885
77,118
65,999
(1,761)
64,238
4,934
69,172
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Inventories:
Raw materials
Work-in-process
Finished goods
Spare parts
December 25
December 26
December 28
2011
22,584
13,753
37,367
4,314
78,018
2010
24,138
12,266
35,757
3,914
76,075
2009
23,570
9,619
33,230
3,393
69,812
During 2011, the Company recorded, within cost of sales, inventory write-downs for slow-moving and obsolete inventory of $6,080 (2010 - $6,539) and
reversals of previously written-down items of $1,688 (2010 - $1,366).
14. Property, plant and equipment:
Land
Buildings
Equipment
Machines
In Progress
Total
Packaging
Expansions
Net book value
At December 28, 2009
Cost
Accumulated depreciation
2010 Activity
Additions
Disposals
Transfers
Depreciation
At December 26, 2010
At December 26, 2010
Cost
Accumulated depreciation
Net book value
At December 27, 2010
Cost
Accumulated depreciation
2011 Activity
Additions
Disposals
Transfers
Depreciation
At December 25, 2011
At December 25, 2011
Cost
Accumulated depreciation
2,565
-
2,565
-
-
-
-
2,565
2,565
-
2,565
2,565
-
2,565
-
-
-
-
2,565
2,565
-
2,565
76,321
314,388
(20,952)
(164,134)
55,369
150,254
29,555
(26,398)
3,157
4,660
-
2,527
(2,416)
60,140
33,111
(283)
6,324
(21,628)
167,778
627
(240)
-
(1,017)
2,527
83,508
350,472
(23,368)
(182,694)
60,140
167,778
28,305
(25,778)
2,527
8,851
-
8,851
1,787
-
(8,851)
-
1,787
1,787
-
1,787
431,680
(211,484)
220,196
40,185
(523)
-
(25,061)
234,797
466,637
(231,840)
234,797
83,508
350,472
(23,368)
(182,694)
60,140
167,778
28,305
(25,778)
2,527
1,787
-
1,787
466,637
(231,840)
234,797
377
38,204
2,014
-
-
(3,078)
59,076
8,598
(263)
1,376
(22,881)
154,608
-
-
(830)
2,074
-
(1,376)
-
38,615
38,615
-
38,615
49,193
(263)
-
(26,789)
256,938
510,910
(253,972)
256,938
85,522
356,074
(26,446)
(201,466)
59,076
154,608
28,134
(26,060)
2,074
28
Government grants in respect of property, plant and equipment were recognized within deferred income totaling $249 in 2011 (2010 - $1,043). No
impairment losses or impairment reversals were recorded during 2011 (2010 - nil). No borrowing costs were capitalized during 2011 (2010 - nil).
15. Intangible assets:
Net book value
At December 28, 2009
Cost
Accumulated amortization and impairment
2010 Activity
Additions
Amortization
At December 26, 2010
At December 26, 2010
Cost
Accumulated amortization and impairment
Net book value
At December 27, 2010
Cost
Accumulated amortization and impairment
2011 Activity
Additions
Disposals
Amortization
At December 25, 2011
At December 25, 2011
Cost
Accumulated amortization and impairment
Goodwill
Software
Patents
Related
Related
Total
Customer
Marketing
31,546
(18,780)
12,766
-
-
12,766
31,546
(18,780)
12,766
31,546
(18,780)
12,766
-
-
-
12,766
31,546
(18,780)
12,766
6,831
(5,333)
1,498
243
(662)
1,079
7,056
(5,977)
1,079
7,056
(5,977)
1,079
461
(3)
(676)
861
7,510
(6,649)
861
4,017
(3,899)
118
9
(55)
72
4,026
(3,954)
72
4,026
(3,954)
72
1
-
(29)
44
4,027
(3,983)
44
11,996
(8,394)
3,602
-
(1,160)
2,442
11,996
(9,554)
2,442
11,996
(9,554)
2,442
-
-
(1,160)
1,282
11,996
(10,714)
1,282
2,058
(1,537)
521
-
(214)
307
1,924
(1,617)
307
1,924
(1,617)
307
-
-
(184)
123
1,924
(1,801)
123
56,448
(37,943)
18,505
252
(2,091)
16,666
56,548
(39,882)
16,666
56,548
(39,882)
16,666
462
(3)
(2,049)
15,076
57,003
(41,927)
15,076
The amortization of software and patents is included within general and administrative expenses and the amortization of customer related and marketing
related intangibles is included within sales, marketing and distribution expenses.
As of December 25, 2011, there were no inde(cid:2) nite life intangible assets other than goodwill.
The 2011 goodwill balance of $12,766 (2010 - $12,766) includes $12,542 (2010 - $12,542) related to the lidding CGU. The impairment testing for this
CGU was conducted under the value-in-use approach, using a pre-tax discount rate of 12.4 percent (2010 - 13.5 percent). Cash (cid:3) ows were projected
based on actual operating results and the (cid:2) ve-year business plan. For the 2011 impairment testing, average volume growth for the next (cid:2) ve years was
4.1 percent and the average gross pro(cid:2) t percentage over the same time-frame was two percentage points lower than the actual gross pro(cid:2) t percentage
attained in 2011. For the 2010 impairment testing, the average volume growth for the next (cid:2) ve years was 2.5 percent and the average gross pro(cid:2) t
percentage over the same time-frame was within one percentage point of the actual gross pro(cid:2) t percentage attained in 2010. Cash (cid:3) ows after the (cid:2) ve
year period were assumed to increase at a terminal growth rate of 1.5 percent (2010 - 1.5 percent).
No impairment losses or impairment reversals were recorded during 2011 (2010 - nil).
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Employee bene(cid:2) t plans:
The Company maintains (cid:2) ve funded non-contributory de(cid:2) ned bene(cid:2) t pension plans, one funded non-contributory supplementary income postretirement
plan for certain CDN-based executives, one unfunded contributory de(cid:2) ned bene(cid:2) t postretirement plan for health-care bene(cid:2) ts for a limited group of US
individuals, one multiemployer de(cid:2) ned bene(cid:2) t pension plan for certain unionized employees in the US and seven de(cid:2) ned contribution pension plans.
Effective January 1, 2005, all de(cid:2) ned bene(cid:2) t pension plans were frozen to new entrants except one, which was frozen effective January 1, 2009. All new
CDN employees are required, and all new US employees have the option, to participate in de(cid:2) ned contribution plans upon satisfaction of certain eligibility
requirements.
Total amounts paid by the Company on account of all bene(cid:2) t plans, consisting of: de(cid:2) ned bene(cid:2) t pension plans, supplementary income postretirement
plan, direct payments to bene(cid:2) ciaries for the unfunded postretirement plan, the multiemployer de(cid:2) ned bene(cid:2) t pension plan and the de(cid:2) ned contribution
plans, amounted to $8,328 (2010 - $7,590).
De(cid:2) ned bene(cid:2) t plans
For (cid:2) nancial reporting purposes, the Company measures the bene(cid:2) t obligations and fair value of the bene(cid:2) t plan assets as of the year-end date. The
most recent actuarial valuations for funding purposes for the funded non-contributory plans were completed as at the following dates: January 1, 2010
for one plan, December 31, 2010 for three plans, and October 31, 2005 for one frozen plan which will not have a new actuarial valuation completed at
this time. The most recent actuarial valuations for funding purposes for the supplementary income postretirement plan and the postretirement plan for
health-care bene(cid:2) ts were dated January 1, 2009 and January 1, 2010 respectively. The next required actuarial valuations for all of the Company’s de(cid:2) ned
bene(cid:2) t plans are three years from the aforementioned dates. Based on the most recent actuarial valuations, the Company expects to contribute $2,671
in cash to its de(cid:2) ned bene(cid:2) t plans in 2012.
The following presents the (cid:2) nancial position of the Company’s de(cid:2) ned bene(cid:2) t pension plans and other post retirement bene(cid:2) ts, which include the
supplementary income plan and the postretirement plan for health-care bene(cid:2) ts:
Change in bene(cid:2) t obligation
Bene(cid:2) t obligation, beginning of year
Current service cost
Finance expense
Actuarial losses recognized in other comprehensive income
Bene(cid:2) ts paid
Foreign exchange
Bene(cid:2) t obligation, end of year
Change in bene(cid:2) t plan assets
Fair value of bene(cid:2) t plan assets, beginning of year
Expected return on bene(cid:2) t plan assets
Actuarial (losses) gains recognized in other comprehensive income
Employer contributions
Bene(cid:2) ts paid
Foreign exchange
Fair value of bene(cid:2) t plan assets, end of year
Funded status
Present value of funded obligations
Fair value of bene(cid:2) t plan assets
Status of funded obligations
Present value of unfunded obligations
Total funded status of obligations
Assets not recognized due to pension plan asset ceiling limit
2011
2010
65,769
2,928
3,579
8,099
(2,162)
(662)
77,551
62,911
4,089
(4,125)
5,148
(2,162)
(744)
65,117
57,909
2,537
3,545
1,856
(1,675)
1,597
65,769
53,404
3,474
1,186
4,750
(1,675)
1,772
62,911
December 25
December 26
December 28
2011
2010
2009
(75,659)
65,117
(10,542)
(1,892)
(12,434)
(70)
(12,504)
(63,829)
62,911
(918)
(1,940)
(2,858)
(531)
(3,389)
(56,048)
53,404
(2,644)
(1,861)
(4,505)
(1,566)
(6,071)
30
December 25
December 26
December 28
2011
2010
2009
-
(12,504)
(12,504)
62%
32%
6%
100%
3,330
(6,719)
(3,389)
62%
32%
6%
100%
2011
(2,928)
(3,579)
4,089
(2,418)
(1,364)
(459)
(870)
(235)
(2,928)
(36)
(12,224)
453
(11,771)
402
(11,771)
(11,369)
65,117
(77,551)
(12,434)
(4,125)
584
1,110
(7,181)
(6,071)
61%
32%
7%
100%
2010
(2,537)
(3,545)
3,474
(2,608)
(1,184)
(338)
(818)
(197)
(2,537)
4,660
(670)
1,072
402
-
402
402
62,911
(65,769)
(2,858)
1,186
-
Amounts recognized in the balance sheet
Employee bene(cid:2) t plan assets
Employee bene(cid:2) t plan liabilities
Bene(cid:2) t plan assets
The following represents the weighted average allocation of bene(cid:2) t plan assets:
Asset category
Equity securities
Debt securities
Cash
Total
Net bene(cid:2) t plan expense
Current service cost
Finance expense on bene(cid:2) t obligation
Expected return on bene(cid:2) t plan assets
Current service cost is recognized in the following line items in the statement of income:
Cost of sales
Sales, marketing and distribution expenses
General and administrative expenses
Research and technical expenses
Actual return on bene(cid:2) t plan assets
Amounts recognized in other comprehensive income
Actuarial losses
Assets not recognized due to pension plan asset ceiling limit
Cumulative actuarial gains / (losses) recognized in other comprehensive income
Cumulative amount, beginning of year
Recognized during the year
Cumulative amount, end of year
Historical information
Fair value of bene(cid:2) t plan assets
Present value of bene(cid:2) t obligations
De(cid:2) cit in the plans
Experience adjustments arising on bene(cid:2) t plan assets
Experience adjustments arising on bene(cid:2) t plan liabilities
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Signi(cid:2) cant assumptions
The following weighted averages were used:
Bene(cid:2) t obligations as of the year-end date:
Discount rate
Rate of compensation increase
Net bene(cid:2) t plan expense for the year:
Discount rate
Expected return on bene(cid:2) t plan assets
Rate of compensation increase
2011
2010
4.5%
3.7%
5.4%
6.4%
3.9%
5.4%
3.9%
6.0%
6.3%
3.9%
The de(cid:2) ned bene(cid:2) t pension plans do not invest in the shares of the Company. The expected rate of return on the bene(cid:2) t plan assets is based on historical
and projected rates of return for each asset category measured over a four-year time period. The objective of the asset allocation policy is to manage
the funded status of the plans at an appropriate level of risk, giving consideration to the security of the assets and the potential volatility of market returns.
The long-term rate of return is targeted to exceed the return indicated by a benchmark portfolio by at least 1 percent annually.
The postretirement bene(cid:2) t plan assumed health-care cost trend rate is 8.1 percent with the rate declining to 4.5 percent by 2028. A one-percentage point
change in the assumed health-care cost trend rate would affect the net bene(cid:2) t plan expense by approximately $5 and the bene(cid:2) t obligation by $111.
Multiemployer de(cid:2) ned bene(cid:2) t pension plan
The Company participates in one multiemployer de(cid:2) ned bene(cid:2) t pension plan providing bene(cid:2) ts to certain unionized employees in the US. The
administration of the plan and investment of its assets are controlled by a board of independent trustees. The trustees have determined that this plan is in
a critical status position from a funding perspective. As a result, the trustees have formulated a funding rehabilitation plan to forestall a possible insolvency
of the plan. The rehabilitation plan requires participating employers to provide phased in contribution increases for future years with the contributions
increasing 25 percent by 2012. These contributions are directed solely toward improving the plan’s funding status. During 2011, the Company (cid:2) led
the necessary paperwork with the plan trustees to withdraw from the plan. Pursuant to US federal legislation, an employer who withdraws from a plan
with unfunded vested bene(cid:2) ts is responsible for a share of that underfunding. See note 19 for the details on the accounting for the withdrawal liability.
This multiemployer de(cid:2) ned bene(cid:2) t pension plan is accounted for using the accounting standards for de(cid:2) ned contribution plans as there is insuf(cid:2) cient
information to apply de(cid:2) ned bene(cid:2) t pension plan accounting. Accordingly, the Company’s pension expense in respect to this plan of $135 (2010 - $456)
is the annual funding contribution and the Company does not recognize its share of a plan surplus or de(cid:2) cit.
De(cid:2) ned contribution pension plans
The Company maintains four de(cid:2) ned contribution plans for employees in Canada and three savings retirement plans (401(k) Plans) for employees in the
United States. The Company’s total expense for these plans was $2,980 (2010 - $2,384).
17. Deferred tax assets and liabilities:
The following are the components of the deferred tax assets and liabilities recognized by the Company:
Assets
Liabilities
Net
December 25
December 26
December 25
December 26
December 25
December 26
Trade and other receivables
Inventories
Prepaid expenses
Derivative (cid:2) nancial instruments
Property, plant and equipment
Intangible assets
Employee bene(cid:2) t plans
Trade payables and other liabilities
Provisions
Tax assets (liabilities)
Set off of tax
Net tax assets (liabilities)
2011
447
3,147
-
168
3,726
965
4,446
1,611
3,511
18,021
(14,292)
3,729
2010
498
2,608
-
-
4,167
887
2,455
1,622
2,745
14,982
(10,808)
4,174
32
2011
2010
-
-
-
(76)
(30,762)
(449)
-
(121)
-
(31,408)
14,292
(17,116)
-
-
(74)
(188)
(29,518)
(403)
(811)
(136)
-
(31,130)
10,808
(20,322)
2011
447
3,147
(76)
168
(27,036)
516
4,446
1,490
3,511
2010
498
2,608
(74)
(188)
(25,351)
484
1,644
1,486
2,745
(13,387)
(16,148)
-
-
(13,387)
(16,148)
Movement in deferred tax assets and liabilities:
2010
Trade and other receivables
Inventories
Prepaid expenses
Derivative (cid:2) nancial instruments
Property, plant and equipment
Intangible assets
Employee bene(cid:2) t plans
Trade payables and other liabilities
Provisions
2011
Trade and other receivables
Inventories
Prepaid expenses
Derivative (cid:2) nancial instruments
Property, plant and equipment
Intangible assets
Employee bene(cid:2) t plans
Trade payables and other liabilities
Provisions
Opening
Recognized
Recognized
Exchange
Balance
In Income
In Equity
Differences
Ending
Balance
557
2,237
(74)
(372)
(59)
371
3
-
(22,563)
(2,192)
588
2,364
793
256
(16,214)
498
2,608
(74)
(188)
(73)
(592)
684
2,489
631
(51)
539
(2)
-
(25,351)
(1,685)
484
1,644
1,486
2,745
32
(832)
4
766
-
-
-
184
-
-
-
-
7
191
-
-
-
356
-
-
3,634
-
-
(16,148)
(1,229)
3,990
-
-
-
(3)
(596)
(31)
(135)
9
-
(756)
-
-
-
-
-
-
-
-
-
-
498
2,608
(74)
(188)
(25,351)
484
1,644
1,486
2,745
(16,148)
447
3,147
(76)
168
(27,036)
516
4,446
1,490
3,511
(13,387)
Deferred tax assets have been recognized where it is probable that they will be recovered. In recognizing deferred tax assets, the Company has
considered if it is probable that suf(cid:2) cient future income will be available to absorb temporary differences.
No deferred tax liability has been recognized in respect of temporary differences associated with investments in subsidiaries where the Company controls
the timing of the reversal and it is probable that such temporary differences will not reverse in the foreseeable future. The aggregate amount of temporary
differences associated with investments in domestic and foreign subsidiaries for which a deferred tax liability has not been recognized is $190,659 (2010
- $157,802). Temporary differences relating to unremitted earnings of foreign subsidiaries which would be subject to withholding and other taxes totalled
$114,821 (2010 - $96,416).
18. Trade payables and other liabilities:
Trade payables
Other current liabilities and accrued expenses
December 25
December 26
December 28
2011
32,138
27,156
59,294
2010
26,783
25,777
52,560
2009
23,798
21,167
44,965
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Provisions:
Balance at December 27, 2010
Current liabilities
Non-current liabilities
2011 Annual activity
Finance expense - unwinding of discount
Change in discount rates
Balance at December 25, 2011
At December 25, 2011
Current liabilities
Non-current liabilities
Multiemployer
Asset
Withdrawal
Retirement
Liability
Obligations
Total
368
6,744
7,112
216
795
8,123
491
7,632
8,123
-
870
870
22
-
892
101
791
892
368
7,614
7,982
238
795
9,015
592
8,423
9,015
Multiemployer withdrawal liability
The Company participates in one multiemployer de(cid:2) ned bene(cid:2) t pension plan providing bene(cid:2) ts to certain unionized employees in the US. The
administration of the plan and investment of its assets are controlled by a board of independent trustees. The trustees communicated to both the
Company and the Union in 2010 that this plan was in a critical status position from a funding perspective. During the fourth quarter of 2010, the Company
analyzed its options with the assistance of external consultants. Management has determined that the only economically feasible alternative was to
withdraw from the plan and therefore, in the (cid:2) rst quarter of 2011, reached an agreement with the Union to proceed. In addition, the Company (cid:2) led the
necessary paperwork with the plan trustees to withdraw from the plan. Pursuant to US federal legislation, an employer who withdraws from a plan with
unfunded vested bene(cid:2) ts is responsible for a share of that underfunding. As a consequence of withdrawing from the plan, the Company will be required
to make monthly payments at a constant dollar value estimated at $41, or $491 on an annual basis, over a twenty year period. A one-percentage point
increase in the discount rates would have decreased the December 25, 2011 liability by $676 and increased income before income taxes by $676.
Asset retirement obligations
For certain building leases, the Company is required to remove all equipment and restore the premises at the end of the lease.
20. Share-based payments:
Effective January 1, 2004, the Board of Directors established the President’s Incentive Plan (Plan), whereby the Company grants to B.J. Berry (President)
60,000 restricted share units (RSUs) upon completion of each year of service. There is no cost of the RSUs to the President and there is no potential for
repricing. The Company pays to the President the cash value of the RSUs based on the closing share price on a date selected by the President during
the fourth quarter of the third year or the (cid:2) rst quarter of the fourth year subsequent to the year the RSUs were granted. A date cannot be selected during
periods in which insiders may not trade Winpak shares. In the event of the termination of the President’s employment for any reason, the cash value of
the RSUs shall vest and be paid to the President or his personal representative, as the case may be. The cash value of a RSU is the market value of the
common shares of the Company on the day prior to the date of payment. In addition, the Company is required to pay the President an amount equal to
the dividends paid on the common shares of the Company with respect to each RSU if, as and when, declared and paid.
Details of RSUs issued and outstanding during the current and prior year are as follows:
Outstanding, beginning of year
Settled
Granted
Outstanding, end of year
Available for settlement, end of year
34
2011
240,000
(60,000)
60,000
240,000
60,000
2010
240,000
(60,000)
60,000
240,000
60,000
The 240,000 RSUs outstanding at the end of 2011 mature 60,000 annually from 2012 through 2015 and the 240,000 RSUs outstanding at the end of 2010
mature 60,000 annually from 2011 through 2014.
The fair value of the RSUs at the grant date and each subsequent reporting date is determined based upon the market value of the Company’s common
shares.
The personnel expense recorded in the statement of income under the Plan was $961 (2010 - $1,311). The settlement price in 2011 was $14.72 US per
RSU (2010 - $8.83 US). At December 25, 2011, the carrying value of the liability, as well as the intrinsic value of the vested liability, in respect of the Plan
was $2,856 (2010 - $2,828).
21. Share capital and reserves:
Share capital
At December 25, 2011, the authorized voting common shares were unlimited (2010 - unlimited). The issued and fully paid voting common shares at
December 25, 2011 were 65,000,000 (2010 - 65,000,000). The shares have no par value. The Company has no stock option plans in place.
Reserves
Reserves comprise the effective portion of the cumulative net change in the fair value of cash (cid:3) ow hedging instruments related to the hedged transactions
that have not yet occurred.
Dividends
During 2011, dividends in Canadian dollars of 12 cents per common share were declared (2010 - 12 cents).
22. Earnings per share:
Net income attributable to equity holders of the Company
Weighted average shares outstanding (000’s)
Basic and fully diluted earnings per share - cents
23. Financial instruments:
The following sets out the classi(cid:2) cation and the carrying value and fair value of (cid:2) nancial instruments:
Assets (Liabilities)
Cash and cash equivalents
Trade and other receivables
Classi(cid:2) cation
Loans and receivables
Loans and receivables
Derivative (cid:2) nancial instrument assets
Derivatives designated as effective hedges
Trade payables and other liabilities
Other (cid:2) nancial liabilities
Derivative (cid:2) nancial instrument liabilities
Derivatives designated as effective hedges
2011
63,783
65,000
98
2010
55,296
65,000
85
Carrying /
Fair Value
126,879
83,935
242
(59,294)
(836)
The fair value of cash and cash equivalents, trade and other receivables, trade payables and other liabilities approximate their carrying value because
of the short-term maturity of these instruments. The fair value of foreign currency forward contracts, designated as cash (cid:3) ow hedges, have been
determined by valuing those contracts to market against prevailing forward foreign exchange rates as at the year-end reporting date. The inputs used
for fair value measurements, including their classi(cid:2) cation within the required three levels of the fair value hierarchy that prioritizes the inputs used for fair
value measurement, are as follows:
Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 - inputs that are not based on observable market data.
35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the classi(cid:2) cation of (cid:2) nancial instruments within the fair value hierarchy as at December 25, 2011:
Financial Assets (Liabilities)
Foreign currency forward contracts
24. Commitments and guarantees:
Level 1
-
Level 2
(594)
Level 3
-
Total
(594)
Commitments:
The Company has commitments to purchase property, plant and equipment of $35,184 (2010 - $4,539).
The Company rents premises and equipment under operating leases that expire at various dates until January 31, 2016. The aggregate minimum rentals
payable for these leases are as follows:
Year
Amount
2012
1,529
2013
1,272
2014
1,151
2015
571
2016
Thereafter
11
-
Total
4,534
During 2011, $1,767 was recognized as an expense in the statement of income in respect of operating leases (2010 - $1,850).
Guarantees:
Directors and of(cid:2) cers
The Company and its subsidiaries have entered into indemni(cid:2) cation agreements with their respective directors and of(cid:2) cers to indemnify them, to the
extent permitted by law, against any and all amounts paid in settlement and damages incurred by the directors and of(cid:2) cers as a result of any lawsuit, or
any judicial, administrative or investigative proceeding involving the directors and of(cid:2) cers. Indemni(cid:2) cation claims will be subject to any statutory or other
legal limitation period. The Company has purchased directors’ and of(cid:2) cers’ liability insurance to mitigate losses from any such claims.
Leased real property
The Company and its subsidiaries enter into operating leases in the ordinary course of business for real property. In certain instances, the Company and
its subsidiaries have indemni(cid:2) ed the landlord from any obligations that may arise from any occurrences of personal bodily injury, loss of life and property
damages. The Company’s property and liability insurance coverage mitigates losses from any such claims.
Pension plan
The Company has indemni(cid:2) ed the Manitoba Pension Commission from any and all claims that may be made by any bene(cid:2) ciary under a certain de(cid:2) ned
bene(cid:2) t pension plan. The indemnity relates to the transfer of a portion of the surplus in the respective pension plan to a non-contributory supplementary
income plan.
Given the nature of the aforementioned indemni(cid:2) cation agreements, the Company is unable to reasonably estimate its maximum potential liability under
these agreements. The Company believes the likelihood of a material payment pursuant to these indemni(cid:2) cation agreements is remote. No amounts
have been recorded in the consolidated (cid:2) nancial statements with respect to these indemni(cid:2) cation agreements.
25. Financial risk management:
In the normal course of business, the Company has risk exposures consisting primarily of foreign exchange risk, interest rate risk, commodity price risk,
credit risk and liquidity risk. The Company manages its risks and risk exposures through a combination of derivative (cid:2) nancial instruments, insurance,
a system of internal and disclosure controls and sound business practices. The Company does not purchase any derivative (cid:2) nancial instruments for
speculative purposes.
Financial risk management is primarily the responsibility of the Company’s corporate (cid:2) nance function. Signi(cid:2) cant risks are regularly monitored and
actions are taken, when appropriate, according to the Company’s approved policies, established for that purpose. In addition, as required, these risks are
reviewed with the Company’s Board of Directors.
Foreign exchange risk
Translation differences arise when foreign currency monetary assets and liabilities are translated at foreign exchange rates that change over time. These
foreign exchange gains and losses are recorded in other income (expenses). As a result of the Company’s CDN dollar net asset monetary position as
at December 25, 2011, a one-cent change in the year-end foreign exchange rate from 1.0208 to 1.0108 (US to CDN dollars) would have increased net
income by $202 for 2011. Conversely, a one-cent change in the year-end foreign exchange rate from 1.0208 to 1.0308 (US to CDN dollars) would have
decreased net income by $202 for 2011.
36
The Company’s foreign exchange policy requires that between 50 and 80 percent of the Company’s net requirement of CDN dollars for the ensuing 9 to
15 months will be hedged at all times with a combination of cash and cash equivalents and forward or zero-cost option foreign currency contracts. The
Company may also enter into forward foreign currency contracts when equipment purchases will be settled in other foreign currencies. Transactions are
only conducted with certain approved Schedule I Canadian (cid:2) nancial institutions. Certain foreign currency forward contracts matured during the year and
the Company realized pre-tax foreign exchange gains of $1,056. Of these foreign exchange gains, $996 were recorded in other income (expenses) and
$60 were recorded in property, plant and equipment.
As at December 25 2011, the Company had US to CDN dollar foreign currency forward contracts outstanding with a notional amount of US $21.0 million
at an average exchange rate of 1.0209 maturing between January and September 2012 and US dollar to Swiss franc foreign currency forward contracts
outstanding with a notional amount of US $7.6 million at an average exchange rate of 0.8634 (US dollars to Swiss francs) maturing between February
and August 2012. The fair value of these (cid:2) nancial instruments was negative $594 US and the corresponding unrealized loss has been recorded in other
comprehensive income.
Interest rate risk
The Company’s interest rate risk arises from interest rate (cid:3) uctuations on the (cid:2) nance income that it earns on its cash invested in money market accounts
and short-term deposits. The Company developed and implemented an investment policy, which was approved by the Company’s Board of Directors,
with the primary objective to preserve capital, minimize risk and provide liquidity. Regarding the December 25, 2011 cash and cash equivalents balance
of $126.9 million, a 1.0 percent increase/decrease in interest rate (cid:3) uctuations would increase/decrease income before income taxes by $1,269 annually.
Commodity price risk
The Company’s manufacturing costs are affected by the price of raw materials, namely petroleum-based and natural gas-based plastic resins and
aluminum. In order to manage its risk, the Company has entered into selling price-indexing programs with certain customers. Changes in raw material
prices for these customers are re(cid:3) ected in selling price adjustments but there is a slight time lag. For 2011, 62 percent of revenue was to customers
with selling price-indexing programs. For all other customers, the Company’s preferred practice is to match raw material cost changes with selling price
adjustments, albeit with a slight time lag. This matching is not always possible, as customers react to selling price pressures related to raw material cost
(cid:3) uctuations according to conditions pertaining to their markets.
Credit risk
The Company is exposed to credit risk from its cash and cash equivalents held with banks and (cid:2) nancial institutions, derivative (cid:2) nancial instruments
(foreign currency forward contracts), as well as credit exposure to customers, including outstanding trade and other receivable balances.
The following table details the maximum exposure to the Company’s counterparty credit risk which represents the carrying value of the (cid:2) nancial asset:
Cash and cash equivalents
Trade and other receivables
Foreign currency forward contracts
December 25
December 26
December 28
2011
126,879
83,935
242
211,056
2010
90,488
77,118
629
168,235
2009
61,164
69,172
1,182
131,518
Credit risk on cash and cash equivalents and (cid:2) nancial instruments arises in the event of non-performance by the counterparties when the Company
is entitled to receive payment from the counterparty who fails to perform. The Company has established an investment policy to manage its cash. The
policy requires that the Company manage its risk by investing its excess cash on hand on a short-term basis, up to a maximum of six months, with
several (cid:2) nancial institutions and/or governmental bodies that must be ‘AA’ rated, or higher, by a recognized international credit rating agency or insured
100 percent by a ‘AAA’ rated CDN or US government. The Company manages its counterparty risk on its (cid:2) nancial instruments by only dealing with CDN
Schedule I (cid:2) nancial institutions.
In the normal course of business, the Company is exposed to credit risk on its trade and other receivables from customers. The Company’s current
credit exposure is higher in the weakened North American economic environment. To mitigate such risk, the Company performs ongoing customer credit
evaluations and assesses their credit quality by taking into account their (cid:2) nancial position, past experience and other pertinent factors. Management
regularly monitors customer credit limits, performs credit reviews and, in certain cases insures trade receivable balances against credit losses.
As at December 25, 2011, the Company believes that the credit risk for trade and other receivables is mitigated due to the following: (a) a broad customer
base which is dispersed across varying market sectors and geographic locations, (b) 97 percent (2010 - 97 percent) of gross trade and other receivable
balances are outstanding for less than 60 days, (c) 20 percent (2010 - 17 percent) of the trade and other receivables balance are insured against credit
losses, and (d) the Company’s exposure to individual customers is limited and the ten largest customers, on aggregate, accounted for 35 percent (2010
- 33 percent) of the total trade and other receivables balance.
The carrying amount of trade and other receivables is reduced through the use of an allowance account and the amount of the loss is recognized in
the statement of income within general and administrative expenses. When a receivable balance is considered uncollectible, it is written off against the
allowance for doubtful accounts. Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in
the statement of income.
37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table sets out the aging details of the Company’s trade and other receivables balances outstanding based on the status of the receivable in
relation to when the receivable was due and payable and related allowance for doubtful accounts:
Current - neither impaired nor past due
Not impaired but past the due date:
Within 30 days
31 - 60 days
Over 60 days
Less: Allowance for doubtful accounts
Total trade and other receivables, net
The following table details the continuity of the allowance for doubtful accounts:
Balance, beginning of year
Provisions for the year, net of recoveries
Uncollectible amounts written off
Foreign exchange impact
Balance, end of year
December 25
2011
66,890
15,606
1,841
1,044
85,381
(1,446)
83,935
December 26
2010
December 28
2009
63,716
13,015
1,237
778
78,746
(1,628)
77,118
2011
(1,628)
(90)
272
-
(1,446)
52,042
16,725
1,271
895
70,933
(1,761)
69,172
2010
(1,761)
(320)
462
(9)
(1,628)
Liquidity risk
Liquidity risk is the risk that the Company would not be able to meet its (cid:2) nancial obligations as they come due. Management believes that the liquidity
risk is low due to the strong (cid:2) nancial condition of the Company. This risk assessment is based on the following: (a) cash and cash equivalents amounts
of $126.9 million, (b) no outstanding bank loans, (c) unused credit facilities comprised of unsecured operating lines of $38 million, (d) the ability to obtain
term-loan (cid:2) nancing to fund an acquisition, if needed, (e) an informal investment grade credit rating, and (f) the Company’s ability to generate positive cash
(cid:3) ows from ongoing operations. Management believes that the Company’s cash (cid:3) ows are more than suf(cid:2) cient to cover its operating costs, working capital
requirements, capital expenditures and dividend payments in 2012. The Company’s trade payables and other liabilities and derivative (cid:2) nancial instrument
liabilities are virtually all due within twelve months.
Capital management
The Company’s objectives in managing capital are to ensure the Company will continue as a going concern and have suf(cid:2) cient liquidity to pursue its
strategy of organic growth combined with strategic acquisitions and to deploy capital to provide an appropriate return on investment to its shareholders.
The Company also strives to maintain an optimal capital structure to reduce the overall cost of capital.
In the management of capital, the Company includes bank overdrafts, bank loans and shareholders’ equity. The Board of Directors has established
quantitative return on capital criteria for management and year-over-year sustainable earnings growth targets. The Board of Directors also reviews, on a
regular basis, the level of dividends paid to the Company’s shareholders.
The Company has externally imposed capital requirements as governed through its bank operating line credit facilities. The Company monitors capital
on the basis of funded debt to EBITDA (income before interest, income taxes, depreciation and amortization) and debt service coverage. Funded debt
is de(cid:2) ned as the sum of bank loans and bank overdrafts less cash and cash equivalents. The funded debt to EBITDA is calculated as funded debt, as
at the (cid:2) nancial reporting date, over the 12-month rolling EBITDA. This ratio is to be maintained under 3.00:1. As at December 25, 2011, the ratio was
0.00:1. Debt service coverage is calculated as a 12-month rolling income from operations over debt service. Debt service is calculated as the sum of
one-sixth of bank loans outstanding plus annualized (cid:2) nance expense and dividends. This ratio is to be maintained over 1.50:1. As at December 25,
2011, the ratio was 13.15:1.
There were no changes in the Company’s approach to capital management during 2011.
38
26. Segment reporting:
The Company operates in one operating segment being the manufacture and sale of packaging materials. The Company operates principally in Canada
and the United States. The following summary presents key information by geographic segment:
2011
Revenue
Property, plant and equipment and intangible assets
2010
Revenue
Property, plant and equipment and intangible assets
United
States
Canada
Other
Consolidated
503,643
122,351
110,462
149,663
452,194
101,165
97,230
150,298
37,958
-
30,017
-
652,063
272,014
579,441
251,463
Major customer
During 2011, the Company reported revenue to one customer representing 14 percent of total revenue (2010 - 8 percent).
27. Contingencies:
In the normal course of business activities, the Company may be subject to various legal actions. Management contests these actions and believes
resolution of the actions will not have a material adverse impact on the Company’s (cid:2) nancial condition.
28. Related party transactions:
The Company had revenue of $0 (2010 - $215) and purchases of $3,811 (2010 - $3,895) with its majority shareholder company. Trade and other
receivables and trade payables and other liabilities include amounts of $39 (2010 - $39) and $0 (2010 - $28) respectively with the majority shareholder
company. These transactions were completed at market values with normal payment terms.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company.
The Board of Directors and Executive Committee are key management personnel. The following table details the compensation earned by these key
management personnel:
Salaries, fees and short-term bene(cid:2) ts
Post-employment bene(cid:2) ts
Share-based payments
2011
(4,680)
(370)
(961)
(6,011)
2010
(4,871)
(398)
(1,311)
(6,580)
No loans were advanced to key management personnel during the year.
The aggregate remuneration earned by the Board of Directors in 2011 was $500 (2010 - $496). As a group, the Board of Directors hold, directly or
indirectly 52.6 percent (2010 - 52.7 percent) of the outstanding shares of the Company. The members of the Executive Committee hold, directly or
indirectly, 0.4 percent (2010 - 1.0 percent) of the outstanding shares of the Company.
29. Transition to IFRS:
The effect of the Company’s transition to IFRS, described in note 2, is summarized in this note as follows:
a) Transition elections at December 28, 2009
b) Reconciliation of equity as previously reported under Canadian GAAP to IFRS at December 28, 2009, and December 26, 2010
c) Reconciliation of comprehensive income as previously reported under Canadian GAAP to IFRS for the year ended December 26, 2010
d) Adjustments to the consolidated statements of cash (cid:3) ows for the year ended December 26, 2010
39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(a) Transition elections:
The requirements for (cid:2) rst time adoption of IFRS are set out in IFRS 1. In general, a company is required to determine its IFRS accounting policies
and to apply these retrospectively in order to determine its opening balance sheet under IFRS. However, due to cost and/or practical considerations,
retrospective application is not always possible. Accordingly, IFRS 1 permits companies adopting IFRS for the (cid:2) rst time to take certain exemptions from
the full requirements of IFRS in the transition period.
The exemptions most relevant to the Company are as follows:
Business combinations
An exemption is available within IFRS 1 that allows a Company to carry forward its previous Canadian GAAP accounting for business combinations
prior to the transition date. The exemption is optional and can be applied to any business combination transaction prior to the transition date. However,
should a Company choose to adjust a prior business combination to comply with IFRS, all business combinations subsequent to the date of the adjusted
transaction must also be retrospectively adjusted. The Company has elected to apply this exemption and as a result, acquisitions prior to December 28,
2009 have not been restated to comply with IFRS 3 “Business Combinations”.
Borrowing costs
This exemption allows an entity to adopt IAS 23 “Borrowing Costs” prospectively on qualifying assets for which the capitalization commencement date is
after the transition date. The Company applied this exemption.
Employee bene(cid:2) t plans
IFRS 1 allows a Company to recognize all cumulative actuarial gains and losses at the date of transition. The Company has applied this exemption and
all unrecognized actuarial gains and losses have been recognized in opening retained earnings at December 28, 2009. In addition, employee bene(cid:2) t
plan historical disclosures required under IAS 19 may be provided only for (cid:2) scal years subsequent to the transition to IFRS. The Company has applied
this exemption.
Cumulative translation differences (CTD)
This exemption allows CTD to be deemed zero at transition. The Company has applied this exemption at December 28, 2009 and the previous balance
recorded within a separate component of equity was transferred to retained earnings.
Fair value or revaluation as deemed cost
This exemption allows a Company to revalue property, plant and equipment at fair value at its transition date and use this fair value as the deemed cost.
This election applies to individual assets. The Company did not apply this exemption.
Estimates
IFRS 1 stipulates a mandatory exemption from full retrospective application of IFRS as it relates to the use of estimates. It requires that a company’s
estimates in accordance with IFRS at the date of transition to IFRS must be consistent with estimates made for the same date in accordance with previous
Canadian GAAP (after adjustments to re(cid:3) ect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
The Company did not use hindsight in its estimates upon transition to IFRS, nor did it (cid:2) nd any evidence that any of its previously made estimates were
in error.
Hedge Accounting
IFRS 1 stipulates a mandatory exemption from full retrospective application of IFRS as it relates to hedge accounting. In order for a hedging relationship
to qualify for hedge accounting at the transition date, the relationship must have been fully designated and documented as effective at the transaction
date in accordance with Canadian GAAP, and that designation and documentation must be updated in accordance with IAS 39 at the transition to IFRS.
The Company’s hedging relationships were fully documented and designated at the transaction dates under Canadian GAAP and satis(cid:2) ed the hedge
accounting criteria under IFRS at the transition date.
40
(b) Reconciliation of equity as previously reported under Canadian GAAP to IFRS:
At December 28, 2009
(thousands of US dollars)
Assets
Current assets:
Cash and cash equivalents
Trade and other receivables
Income taxes receivable
Inventories
Prepaid expenses
Deferred tax assets
Derivative (cid:2) nancial instruments
Non-current assets:
Property, plant and equipment
Intangible assets
Goodwill
Employee bene(cid:2) t plan assets
Other assets
Deferred tax assets
Other receivables
Total assets
Equity and Liabilities
Current liabilities:
Trade payables and other liabilities
Income taxes payable
Non-current liabilities:
Employee bene(cid:2) t plan liabilities
Deferred income
Provisions
Deferred tax liabilities
Total liabilities
CDN
GAAP
Change In
Functional
IFRS 1 -
Employee
Reclasses
Currency
CTD
Bene(cid:2) ts
Impairment
Income
Taxes
Netting
IFRS
61,164
-
70,354
a)
(1,182)
-
-
-
(2,310)
1,182
(2,310)
-
17,235
(17,235)
13,602
(14,401)
2,310
799
2,310
-
-
-
-
-
865
865
-
70,559
2,211
2,310
-
206,598
239,017
5,896
17,235
-
14,401
-
-
276,549
483,147
b)
a)
c)
c)
d)
d)
b)
d)
44,965
2,931
e)
47,896
1,673
11,363
-
32,459
e)
45,495
93,391
-
-
-
(747)
-
-
-
(747)
(19,691)
(1,251)
-
-
-
-
-
(20,942)
(21,689)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(865)
(865)
-
(5,830)
(5,830)
(5,830)
-
-
-
-
-
-
-
-
-
-
-
(17,811)
-
-
-
-
-
-
-
-
-
-
-
-
(3,375)
-
-
-
-
-
(17,811)
(17,811)
(3,375)
(3,375)
-
-
-
-
-
189
(5,510)
(5,321)
(5,321)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,730
-
1,730
1,730
-
-
-
-
-
-
-
-
-
-
-
-
(39,598)
(18,309)
23,739
18,309
(12,490)
(3,375)
882
(15,859)
-
(15,859)
(21,689)
-
-
-
-
(12,490)
(3,375)
-
(12,490)
(17,811)
-
(3,375)
(3,375)
882
848
1,730
1,730
41
-
-
1,255
-
-
-
-
61,164
69,172
1,255
69,812
2,211
-
1,182
1,255
204,796
870
-
-
5,319
-
(632)
-
5,557
6,812
-
1,255
1,255
5,319
-
870
(632)
5,557
6,812
-
-
-
-
-
-
-
6,812
220,196
18,505
-
1,110
-
3,408
799
244,018
448,814
44,965
5,051
50,016
7,181
11,363
870
19,622
39,036
89,052
-
29,195
810
313,038
343,043
16,719
359,762
448,814
Non-controlling interests
15,871
f)
(15,871)
Equity:
Share capital
Reserves
Retained earnings
Total equity attributable to equity
holders of the Company
Non-controlling interests
Total equity
Total equity and liabilities
29,195
58,717
285,973
373,885
-
f)
373,885
483,147
-
-
-
-
15,871
15,871
-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(b) Reconciliation of equity as previously reported under Canadian GAAP to IFRS - continued:
Change In
Functional
IFRS 1 -
Employee
Income
Reclasses
Currency
CTD
Bene(cid:2) ts
Impairment
Taxes
Provisions
Netting
IFRS
At December 26, 2010
(thousands of US dollars)
Assets
Current assets:
Cash and cash equivalents
Trade and other receivables
Income taxes receivable
Inventories
Prepaid expenses
Deferred tax assets
Derivative (cid:2) nancial instruments
Non-current assets:
Property, plant and equipment
Intangible assets
Goodwill
Employee bene(cid:2) t plan assets
Other assets
Deferred tax assets
Other receivables
Total assets
Equity and Liabilities
Current liabilities:
CDN
GAAP
90,488
77,747
1,234
76,765
2,284
3,472
-
251,990
257,208
4,007
17,590
-
15,633
-
-
294,438
546,428
a)
e)
b)
a)
c)
c)
d)
d)
b)
d)
Trade payables and other liabilities
52,782
Provisions
Income taxes payables
Non-current liabilities:
Employee bene(cid:2) t plan liabilities
Deferred income
Provisions
Deferred tax liabilities
Total liabilities
-
(629)
(636)
-
-
(3,472)
629
(4,108)
-
17,590
(17,590)
15,492
(15,633)
3,472
141
3,472
-
-
-
(690)
-
-
-
(690)
(23,281)
(1,556)
-
-
-
-
-
(24,837)
(636)
(25,527)
-
-
52,782
1,674
11,597
-
-
-
-
-
-
-
-
36,772
e)
50,043
102,825
(636)
(636)
(636)
(222)
199
(23)
-
-
(376)
-
(6,805)
(7,181)
(7,204)
-
-
-
-
-
-
15,620
15,620
(18,323)
-
(18,323)
(636)
(25,527)
42
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16,938)
-
-
-
-
-
-
-
-
-
-
-
-
(3,375)
-
-
-
-
-
(16,938)
(16,938)
(3,375)
(3,375)
-
-
-
-
-
-
269
(5,360)
(5,091)
(5,091)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,862
-
1,862
1,862
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
368
368
6,744
(2,489)
4,255
4,623
-
-
-
-
-
1,355
-
-
-
-
90,488
77,118
1,953
76,075
2,284
-
629
1,355
248,547
870
234,797
-
-
16,666
-
4,776
3,330
-
(1,160)
-
4,486
5,841
-
4,174
141
259,108
507,655
-
-
1,355
1,355
4,776
-
870
(1,160)
4,486
5,841
-
-
-
-
-
-
-
52,560
368
1,554
54,482
6,719
11,221
7,614
20,322
45,876
100,358
-
29,195
441
361,128
390,764
16,533
407,297
5,841
507,655
Non-controlling interests
15,620
f)
(15,620)
Equity:
Share capital
Reserves
Retained earnings
Total equity attributable to equity
holders of the Company
Non-controlling interests
Total equity
Total equity and liabilities
29,195
67,860
330,928
427,983
-
f)
427,983
546,428
(49,110)
(18,309)
30,787
18,309
(11,847)
(3,375)
949
(4,623)
-
-
-
-
(11,847)
(3,375)
-
(11,847)
(16,938)
-
(3,375)
(3,375)
949
913
1,862
1,862
(4,623)
-
(4,623)
-
PRINCIPAL DIFFERENCES BETWEEN CANADIAN GAAP AND IFRS
Reclasses
a) Previously, the assets and liabilities related to cash (cid:3) ow hedging derivatives were presented within trade and other receivables. They are now shown
as derivative (cid:2) nancial instrument assets and liabilities.
b) Under IFRS, all deferred taxes are classi(cid:2) ed as non-current, irrespective of the classi(cid:2) cation of the underlying assets or liabilities to which they relate, or
the expected reversal of the temporary difference. The balances that were classi(cid:2) ed as a current asset are now classi(cid:2) ed as a non-current asset.
c) Goodwill is now included within intangible assets.
d) Under Canadian GAAP, other assets included amounts pertaining to de(cid:2) ned bene(cid:2) t plans, other postretirement bene(cid:2) ts and income tax credits
recoverable. The balances relating to de(cid:2) ned bene(cid:2) t plans and other postretirement bene(cid:2) ts are now included within employee bene(cid:2) t plan assets or
liabilities and the balances relating to income tax credits recoverable are shown within other receivables.
e) In accordance with Canadian GAAP, the income tax effects relating to inter-company pro(cid:2) t eliminations were classi(cid:2) ed as income taxes receivable or
payable, but in accordance with IFRS, they have been presented as part of deferred tax liabilities.
f) Non-controlling interests in the consolidated balance sheets are presented as a separate component within equity. Under Canadian GAAP, non-
controlling interests in the balance sheets were previously classi(cid:2) ed between total liabilities and equity.
Change in functional currency
IAS 21 requires that the functional currency of each entity in a consolidated group be determined separately based on the currency of the primary
economic environment in which the entity operates. A list of primary and secondary indicators is used under IFRS in this determination and these differ
in content and emphasis from those factors used under Canadian GAAP. The parent Company and its Canadian subsidiaries, with the exception of
American Biaxis Inc., operated with the Canadian dollar as their functional currency under Canadian GAAP. However, it was determined that under IFRS,
these same entities had a change in their functional currency, at varying points in time, in prior years. Accordingly, the historical cost basis for certain
balance sheet items is different under IFRS than it was under Canadian GAAP. In addition, the balance in the cumulative translation differences (CTD)
for each of these Canadian subsidiaries was held constant at the amount in effect at the date of the change in functional currency.
At December 28, 2009 and December 26, 2010, inventories, property, plant and equipment, intangible assets, deferred tax liabilities, CTD and retained
earnings recorded under Canadian GAAP were adjusted to re(cid:3) ect the changes in functional currency under IFRS. Additionally, at December 26, 2010,
adjustments were made to trade payables and other liabilities, income taxes payable and deferred income.
IFRS 1 - CTD
In accordance with IFRS 1, the Company has elected to deem all foreign currency translation differences that arose prior to the date of transition in respect
of all foreign operations to be nil at the date of transition. Accordingly, CTD were reclassi(cid:2) ed to retained earnings. There was no related income tax effect.
Employee bene(cid:2) ts
Under Canadian GAAP, unrecognized actuarial gains and losses in excess of 10 percent of the greater of the bene(cid:2) t obligation or the fair value of bene(cid:2) t
plan assets were amortized to the statement of income on a straight-line basis over the expected average remaining service lives of active plan members.
Under IFRS, the Company’s accounting policy is to recognize all actuarial gains and losses directly in equity within other comprehensive income. In
addition, the unrecognized actuarial gains and losses that were amortized to the statement of income under Canadian GAAP during 2010 were reversed.
Furthermore, for employee bene(cid:2) t plans denominated in Canadian dollars, the net adjustment regarding actuarial gains and losses made under IFRS was
revalued into US dollars at the year-end exchange rate.
At the date of transition, all previously unrecognized cumulative actuarial gains and losses were recognized in retained earnings. At December 28, 2009,
employee bene(cid:2) t plan assets were reduced by $14,339 and employee bene(cid:2) t plan liabilities were increased by $189. The related income tax effect
served to decrease deferred tax liabilities by $4,530. Retained earnings were reduced by $9,998.
At December 26, 2010, the cumulative adjustment pertaining to actuarial gains and losses reduced employee bene(cid:2) t plan assets by $14,785, increased
employee bene(cid:2) t plan liabilities by $269, lowered deferred tax liabilities by $4,739 and reduced retained earnings by $10,315.
Under IFRS, the Company is not able to report an employee bene(cid:2) t plan asset in excess of the economic bene(cid:2) t it can expect to receive in the form of
a refund of an employee bene(cid:2) t plan surplus and/or a reduction in future contributions. This differs from the treatment allowed under Canadian GAAP
and as a result, at December 28, 2009, a decrease in the following items was made: employee bene(cid:2) t plan assets - $1,566, deferred tax liabilities - $420
and retained earnings - $1,146. At December 26, 2010, reductions in the following items were made: employee bene(cid:2) t plan assets - $531, deferred tax
liabilities - $142 and retained earnings $389.
43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under Canadian GAAP, past service costs were amortized to the statement of income on a straight-line basis over the expected average remaining
service lives of active plan members. Under IFRS, the Company’s accounting policy is to recognize past service costs directly to the statement of income
if vested, or on a straight-line basis over the average remaining vesting period if unvested. No past service costs were recorded during 2010. In addition,
the past service costs amortized to the statement of income under Canadian GAAP were reversed. For employee bene(cid:2) t plans denominated in Canadian
dollars, the net adjustment regarding past service costs made under IFRS was revalued into US dollars at the year-end exchange rate.
At the date of transition, all previously unrecognized vested past service costs were recognized in retained earnings. At December 28, 2009, employee
bene(cid:2) t plan assets were reduced by $1,906. The related income tax effect lowered deferred tax liabilities by $560. Retained earnings were reduced by
$1,346.
At December 26, 2010, employee bene(cid:2) t plan assets declined by $1,622, deferred tax liabilities decreased by $479 and retained earnings decreased by
$1,143.
Impairment
Upon transition to IFRS, all of the Company’s property, plant and equipment and intangible assets were reviewed to determine whether there were any
indications of impairment. When these indications were present, the asset’s recoverable amount was estimated. In addition, all goodwill balances were
tested for impairment upon transition to IFRS.
For goodwill impairment testing under IFRS, goodwill is allocated to cash-generating units (CGUs). In contrast, Canadian GAAP tests goodwill impairment
at the operating unit level. The Company’s specialty (cid:2) lms business was classi(cid:2) ed as one reporting unit for Canadian GAAP, but has been separated into
two CGUs under IFRS. The goodwill balance relating to the specialty (cid:2) lms business was allocated to the extrusion/coextrusion CGU. At the transition
date of December 28, 2009, it was concluded that an impairment of goodwill had taken place and the entire balance was written off, with a corresponding
reduction in retained earnings. No income tax effect was recorded.
The impairment testing for the extrusion/coextrusion CGU was conducted under the value-in-use approach, using a pre-tax discount rate of 19 percent.
Cash (cid:3) ows were projected based on actual operating results and the (cid:2) ve-year business plan. Average volume growth for 2010 to 2014 was 1.5 percent
and the average gross pro(cid:2) t percentage over the same time-frame was within one percentage point of the actual gross pro(cid:2) t percentage attained in 2009.
Cash (cid:3) ows after 2014 were assumed to increase at a terminal growth rate of 1.5 percent.
Income taxes
Under Canadian GAAP, when the functional currency for accounting purposes differs from the functional currency for income tax purposes, deferred taxes
are (cid:2) rst calculated in the currency in which income taxes are paid and then translated to the functional currency for accounting purposes at the period
end exchange rate. Under IAS 12, deferred taxes are calculated based on the functional currency for accounting purposes, regardless of what functional
currency is used for income tax purposes. A portion of the additional deferred tax asset was attributed to the non-controlling interests.
Provisions
The Company participates in one multiemployer de(cid:2) ned bene(cid:2) t pension plan providing bene(cid:2) ts to certain unionized employees in the US. The
administration of the plan and investment of its assets are controlled by a board of independent trustees. The trustees communicated to both the
Company and the Union in 2010 that this plan was in a critical status position from a funding perspective. During the fourth quarter of 2010, the Company
analyzed its options with the assistance of external consultants. Management has determined that the only economically feasible alternative was to
withdraw from the plan and therefore, in the (cid:2) rst quarter of 2011, reached an agreement with the Union to proceed. In addition, the Company (cid:2) led the
necessary paperwork with the plan trustees to withdraw from the plan. Pursuant to US federal legislation, an employer who withdraws from a plan with
unfunded vested bene(cid:2) ts is responsible for a share of that underfunding.
Based on the relevant facts and circumstances, it was concluded that the potential withdrawal liability met the de(cid:2) nition of a provision under IFRS as at
December 26, 2010 and was recorded. Under Canadian GAAP, the threshold for the recording of a liability is much higher and therefore the withdrawal
liability did not meet the applicable recognition criteria at that date.
As a consequence of withdrawing from the plan, the Company will be required to make monthly payments at a constant dollar value estimated at $41,
or $491 on an annual basis, over a twenty year period. Using pre-income tax discount rates that re(cid:3) ect the risks speci(cid:2) c to the withdrawal liability, the
corresponding present value of the liability at December 26, 2010 of $7,112 and related tax effect of $2,489 were recorded within provisions and deferred
taxes respectively.
Netting
Under IAS 1, assets and liabilities should not be offset unless offsetting is speci(cid:2) cally allowed in another standard. Therefore, in the consolidated IFRS
balance sheets, income taxes, derivative (cid:2) nancial instruments, employee bene(cid:2) ts and deferred taxes are now presented in both assets and liabilities,
where applicable. In addition, the balance pertaining to asset retirement obligations was netted against property, plant and equipment and is now shown
in non-current provisions.
44
Change In
Functional
Employee
Income
Reclasses
Currency
Bene(cid:2) ts
Taxes
Provisions
IFRS
(c) Reconciliation of comprehensive income as previously reported under Canadian GAAP to IFRS:
For The Year Ended December 26, 2010
(thousands of US dollars)
Revenue
Cost of sales
Gross pro(cid:2) t
Other income (expenses)
Sales, general and administrative expenses
Sales, marketing and distribution expenses
General and administrative expenses
Research and technical expenses
Pre-production expenses
Income from operations
Finance income
Finance expense
Income before income taxes
Non-controlling interests
Income tax expense
Net income for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
CDN
GAAP
579,441
(410,869)
168,572
-
(75,954)
-
-
(13,478)
(237)
78,903
a)
a)
a)
a)
170
-
b)
b)
79,073
(1,709)
c)
(24,794)
52,570
-
-
-
-
3,731
3,731
-
190
190
(613)
2,993
(435)
75,954
(49,119)
(26,222)
-
-
-
-
12
(12)
1,709
-
1,709
-
-
-
-
114
6,838
-
-
6,838
-
210
7,048
-
-
41
607
42
445
3,474
(3,545)
374
-
(140)
234
Other comprehensive income:
Cumulative translation difference adjustment
Cash (cid:3) ow hedge gains recognized
Cash (cid:3) ow hedge gains transferred to the statement of income
Actuarial gains on employee bene(cid:2) t plans
Income tax relating to applicable components of other comprehensive income
Other comprehensive income (loss) for the year - net of income tax
Comprehensive income for the year
9,512
1,033
(1,586)
-
184
9,143
61,713
-
-
-
-
-
-
1,709
(9,512)
-
-
-
-
(9,512)
(2,464)
-
-
-
402
7
409
643
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
579,441
(406,948)
172,493
(77)
(7,112)
(5,244)
-
-
-
-
-
(77)
(7,112)
-
-
-
(49,078)
(25,501)
(13,436)
(237)
78,997
3,656
(3,557)
(77)
(7,112)
79,096
-
-
209
132
2,489
(22,026)
(4,623)
57,070
55,296
1,774
57,070
-
1,033
(1,586)
402
191
40
-
-
-
-
-
-
132
(4,623)
57,110
PRINCIPAL DIFFERENCES BETWEEN CANADIAN GAAP AND IFRS
Reclasses
a) Sales, general and administrative expenses have been separated into two categories: sales, marketing and distribution expenses and general and
administrative expenses. Foreign exchange gains and losses were previously included within sales, general and administrative expenses. They are
now shown within other income (expenses) (note 8).
b) Finance income and (cid:2) nance expense were previously shown on a net basis under Canadian GAAP. Under IFRS, the two components are shown
separately.
c) Under Canadian GAAP, non-controlling interests in the consolidated statement of income were presented as an expense. Under IFRS, non-controlling
interests are presented as an allocation of net income for the year.
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Change in functional currency
In 2010, depreciation expense and material costs within cost of sales, foreign exchange gains and losses on monetary items, amortization expense within
general and administrative expenses and income tax expense recorded under Canadian GAAP were adjusted to re(cid:3) ect the changes in functional currency
under IFRS relating to the applicable Canadian subsidiaries.
Certain foreign exchange gains and losses were included in taxable income, but were not recorded for accounting purposes due to having the US dollar
as the functional currency. In addition, the foreign exchange revaluation of the CDN dollar denominated capital cost allowance and cumulative eligible
capital income tax pools generated an income tax recovery.
Under Canadian GAAP, certain entities had the Canadian dollar as their functional currency. Changes in the cumulative translation differences (CTD)
were recorded throughout 2010. However, as a result of these entities now having the US dollar as their functional currency under IFRS, no CTD are
recorded.
Employee bene(cid:2) ts
Consistent with the Company’s accounting policy under IFRS of recording actuarial gains and losses directly in equity within other comprehensive
income, the amounts amortized to the statement of income under Canadian GAAP were reversed. In addition, for employee bene(cid:2) t plans denominated
in Canadian dollars, the cumulative adjustment made in respect of actuarial gains and losses under IFRS was revalued into US dollars at the year-end
exchange rate and the corresponding foreign exchange gains and losses were recorded to the statement of income. As a result, for the year ended
December 26, 2010, income before income taxes increased by $90 and net income increased by $31.
During 2010, pre-income tax actuarial gains of $402 were recorded in other comprehensive income, as well as an income tax recovery of $7, leading to
net other comprehensive income of $409. Included within these (cid:2) gures were adjustments made to employee bene(cid:2) t plan assets for which the balance
exceeded the economic bene(cid:2) t to be received in the form of a refund of an employee bene(cid:2) t plan surplus and/or a reduction in future contributions.
The amortization of past service costs to the statement of income under Canadian GAAP was also reversed. For employee bene(cid:2) t plans denominated
in Canadian dollars, the cumulative adjustment made in respect of past service costs under IFRS was revalued into US dollars at the year-end exchange
rate and the corresponding foreign exchange gains and losses were recorded to the statement of income. As a result, for the year ended December 26,
2010, income before income taxes increased by $284 and net income increased by $203.
Under IFRS, interest costs on the bene(cid:2) t obligation are charged to the statement of income as a (cid:2) nance expense. Likewise, the expected return on
bene(cid:2) t plan assets is presented in the statement of income as (cid:2) nance income. Under Canadian GAAP, these two items were presented as part of
personnel expenses. For the year ended December 26, 2010, (cid:2) nance income increased by $3,474, (cid:2) nance expense increased by $3,545 and personnel
expenses declined by $71.
Income taxes
Consistent with the change in the method of calculating deferred tax balances under IFRS, for the year ended December 26, 2010, income tax recoveries
were recorded, including the reclassi(cid:2) cation of foreign exchange gains recorded under Canadian GAAP. A portion of the net adjustment was attributed
to non-controlling interests.
Provisions
The provision relating to the withdrawal liability on the multiemployer de(cid:2) ned bene(cid:2) t pension plan, including the applicable income tax recovery, was
recorded during 2010.
(d) Adjustments to the consolidated statement of cash (cid:3) ows:
As a result of reversing the amortization of actuarial gains and losses and past service costs in the statement of income, de(cid:2) ned bene(cid:2) t plan expenses
were revised. In addition, the net de(cid:2) ned bene(cid:2) t expense reclassi(cid:2) cation pertaining to (cid:2) nance income and (cid:2) nance expense is shown within the net
(cid:2) nance income line on the consolidated statement of cash (cid:3) ows.
Consistent with the adjustments made regarding the changes in functional currency to depreciation and amortization expense, the corresponding amounts
on the consolidated statement of cash (cid:3) ows were adjusted.
Under Canadian GAAP, a portion of the change in the CTD pertains to working capital balances. As such, the changes in working capital balances relating
to the change in the CTD are excluded from the consolidated statement of cash (cid:3) ows. Under IFRS reporting, all operations have the US dollar as their
functional currency. Accordingly, no CTD are required and none of the changes in working capital relate to the CTD as they do under Canadian GAAP.
46
CORPORATE INFORMATION
Annual Meeting
The Annual Meeting of Shareholders will be held on Wednesday, April 25, 2012 at 4:30 p.m.
at The Fort Garry Hotel, Winnipeg, Canada
Listing
Winpak Ltd. shares are listed WPK on the Toronto Stock Exchange
Transfer Agent
Computershare Investor Services Inc.
Annual Information Form
The most recent version of the Annual Information Form for Winpak Ltd.
is available by contacting Winpak’s Corporate Of(cid:2) ce
100 Saulteaux Crescent, Winnipeg, Canada R3J 3T3
info@winpak.com
Board of Directors
Chairman, A. Aarnio-Wihuri (2), Helsinki, Finland; Chairman, Wihuri Oy
M.H. Aarnio-Wihuri, Helsinki, Finland
J.M. Hellgren (2), Helsinki, Finland; President and Chief Executive Of(cid:2) cer, Wihuri Oy
J.R. Lavery (2), Winnipeg, Canada
D.R.W. Chatterley (1), Winnipeg, Canada
J.S. Pollard (1), Winnipeg, Canada; Co-Chief Executive Of(cid:2) cer, Pollard Banknote Limited
I.T. Suominen (1), Helsinki, Finland; Vice President and Chief Financial Of(cid:2) cer, Wihuri Oy
(1) Member of the Audit Committee
(2) Member of the Compensation, Governance and Nominating Committee
Executive Committee
The Executive Committee, in consultation with the Board of Directors, establishes the objectives and the long-term direction of the Company. The
Committee meets regularly throughout the year to review progress towards achievement of the Company’s goals and to implement policies and
procedures directed at optimizing performance.
B.J. Berry, President and Chief Executive Of(cid:2) cer, Winpak Ltd.
K.M. Byers, President, Winpak Films Inc.
D.A. Johns, President, Winpak Division, a division of Winpak Ltd.
T.L. Johnson, President, Winpak Heat Seal Packaging
K.P. Kuchma, Vice President and Chief Financial Of(cid:2) cer, Winpak Ltd.
J.R. McMacken, President, Winpak Portion Packaging
O.Y. Muggli, Vice President, Technology, Winpak Ltd.
D.J. Stacey, President, Winpak Lane, Inc. and Vice President, Corporate Development, Winpak Ltd.
Auditor
PricewaterhouseCoopers LLP, Winnipeg, Canada
Legal Counsel
Thompson Dorfman Sweatman LLP, Winnipeg, Canada
Jones Day, Atlanta, U.S.A.
47
PACKAGING SOLUTIONS
WINPAK LTD. CORPORATE OFFICE, 100 SAULTEAUX CRESCENT, WINNIPEG, MB, CANADA R3J 3T3
T: (204) 889-1015 F: (204) 888-7806
WWW.WINPAK.COM
WINPAK GROUP WWW.WINPAK.COM
WINPAK DIVISION
A DIVISION OF WINPAK LTD.
100 SAULTEAUX CRESCENT
WINNIPEG, MB R3J 3T3
CANADA
T: (204) 889-1015
F: (204) 832-7781
AMERICAN BIAXIS INC.
100 SAULTEAUX CRESCENT
WINNIPEG, MB R3J 3T3
CANADA
T: (204) 837-0650
F: (204) 837-0659
WINPAK INC.
P.O. BOX 14748
MINNEAPOLIS, MN 55414
U.S.A.
T: (204) 889-1015
F: (204) 832-7781
WINPAK FILMS INC.
219 ANDREWS PARKWAY
SENOIA, GA 30276-9703
U.S.A.
T: (770) 599-6656
F: (770) 599-8387
WINPAK PORTION PACKAGING LTD.
26 TIDEMORE AVENUE
TORONTO, ON M9W 7A7
CANADA
T: (416) 741-6182
F: (416) 741-2918
WINPAK PORTION PACKAGING, INC.
3345 BUTLER AVENUE
SOUTH CHICAGO HEIGHTS, IL 60411-5590
U.S.A.
T: (708) 755-4483
F: (708) 755-7257
WINPAK PORTION PACKAGING, INC.
828A NEWTOWN-YARDLEY ROAD, SUITE 101
NEWTOWN, PA 18940-1785
U.S.A.
T: (267) 685-8200
F: (267) 685-8243
WINPAK PORTION PACKAGING, INC.
1111 WINPAK WAY
SAUK VILLAGE, IL 60411
U.S.A.
WINPAK HEAT SEAL PACKAGING INC.
21919 DUMBERRY ROAD
VAUDREUIL-DORION, QC J7V 8P7
CANADA
T: (450) 424-0191
F: (450) 424-0563
WINPAK HEAT SEAL CORPORATION
1821 RIVERWAY DRIVE
PEKIN, IL 61554
U.S.A.
T: (309) 477-6600
F: (309) 477-6699
WINPAK LANE, INC.
998 S. SIERRA WAY
SAN BERNARDINO, CA 92408
U.S.A.
T: (909) 885-0715
F: (909) 381-1934
WIHURI OY, HEAD OFFICE, WIHURINAUKIO 2, FI-00570 HELSINKI, FINLAND
T: +358 20 510 10 F: +358 20 510 2658
WWW.WIHURI.COM
WIPAK GROUP WWW.WIPAK.COM
WIPAK OY
WIPAKTIE 2, POB 45
FI-15561 NASTOLA
FINLAND
T: +358 20 510 311
F: +358 20 510 3300
WIPAK VALKEAKOSKI OY
KAIVOLANKATU 5
FI-37630 VALKEAKOSKI
FINLAND
T: +358 20 510 311
F: +358 20 510 3444
WIPAK GRYSPEERT S.A.S.
ZONE DES BOIS, BP 60006 BOUSBECQUE
FR-59558 COMINES CÉDEX
FRANCE
T: +33 320 115 656
F: +33 320 115 670
WIPAK UK LTD.
UNIT 3, BUTTINGTON BUSINESS PARK
UK-WELSHPOOL, POWYS SY21 8SL
GREAT BRITAIN
T: +44 1938 555 255
F: +44 1938 555 277
WIPAK POLSKA SP. Z O.O.
UI. SIKORSKIEGO 20
PL-49-340 LEWIN BRZESKI
POLAND
T: +48 77 404 2000
F: +48 77 404 2001
BIAXIS OY LTD.
TEKNIKONKATU 2
FI-15520 LAHTI
FINLAND
T: +358 20 510 312
F: +358 20 510 3500
WIPAK AVANS OY
TEOLLISUUSTIE 4 B
FI-27510 EURA
FINLAND
T: +358 20 510 311
F: +358 20 510 3471
WIPAK IBERICA S.L.
C/SANT CELONI, N076
P.I. CAN PRAT
08450 LLINARS DEL VALLÉS
BARCELONA
SPAIN
T: +34 937 812 020
F: +34 937 812 033
WIPAK WALSRODE GMBH & CO. KG
POB 1661
DE-29656 WALSRODE
GERMANY
T: +49 5161 443 903
F: +49 5161 441 43903
WIPAK B.V.
NIEUWSTADTERWEG 17
NL-6136 KN SITTARD
NETHERLANDS
T: +31 46 420 2999
F: +31 46 458 1311
48