annual management’s discussion and analysis – year ended ... · annual management’s...

Annual Management’s Discussion and Analysis –

Year Ended December 31, 2012

The following Management’s Discussion and Analysis (MD&A) presents the results, financial position and cash flows of Lassonde Industries Inc. and should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes. In addition to containing an analysis of the fourth quarter and year ended December 31, 2012, this MD&A reports on items deemed significant that have taken place from December 31, 2012 up to and including March 28, 2013, which is the date on which this MD&A was approved by the Company’s Board of Directors. Disclosures and values in this MD&A have been prepared in accordance with International Financial Reporting Standards (IFRS) and with the current issued and adopted interpretations applicable to fiscal years ending December 31, 2012. Additional information, including the Annual Information Form and certifications of filings for 2012, is available on the SEDAR website at www.sedar.com. Unless otherwise indicated, the reporting currency for figures in this document is the Canadian dollar. Forward-Looking Statements and Use of Estimates

Any statement contained in this report that does not constitute a historical fact may be deemed a forward-looking statement. Verbs such as "believe," "foresee," "estimate" and other similar expressions, in addition to the negative forms of these terms or any variations thereof, appearing in this report generally indicate forward-looking statements. These forward-looking statements do not provide guarantees as to the future performance of Lassonde Industries Inc. and are subject to risks, both known and unknown, as well as uncertainties that may cause the outlook, profitability and actual results of Lassonde Industries Inc. to differ significantly from the profitability or future results stated or implied by these statements. Detailed information on risks and uncertainties is provided in the “Uncertainties and Principal Risk Factors” section of this MD&A. In preparing consolidated financial statements in accordance with IFRS, management must exercise judgment when applying accounting policies and use assumptions and estimates that have an impact on the amounts of assets, liabilities, sales and expenses reported in the

consolidated financial statements and on the contingent liabilities and contingent assets information provided. The main assumptions and estimates used by management are as follows:

� Measurements of sales, including rebates and trade marketing costs; � Measurements of assets, including goodwill; � Fair value measurements of financial instruments classified in Level 3; � Purchase price allocations for business combinations, including measurements

of identifiable assets and liabilities and goodwill; � Measurements of defined benefit assets and liabilities based on various

actuarial assumptions; and � Measurements of income tax expense.

Because the use of assumptions and estimates is inherent to the financial reporting process, the actual results of items subject to assumptions and estimates could differ from these assumptions and estimates. Corporate Profile Lassonde Industries Inc. develops, manufactures and markets a wide range of fruit and vegetable juices and drinks. One of its subsidiaries, Clement Pappas and Company Inc. (CPC), is the second largest producer of store brand ready-to-drink fruit juices and drinks in the United States and a major producer of cranberry juices, drinks and sauces. Furthermore, the Company develops, manufactures and markets specialty food products such as fondue broths and sauces, soups, sauces and gravies, canned corn-on-the-cob, bruschetta toppings, tapenades, pestos and sauces for pasta and pizza. It also imports selected wines from several countries of origin for packaging and marketing purposes and also produces apple cider and wine-based beverages. The Company produces superior quality products through the efforts of some 2,000 people working in 14 plants across Canada and the United States. The shares of Lassonde Industries Inc. are listed on the Toronto Stock Exchange (TSX). The Company has four principal operating subsidiaries: A. Lassonde Inc., Clement Pappas and Company Inc., Lassonde Specialties Inc., and Arista Wines Inc. It is active in two market segments: the retail segment and the food service segment. Retail sales account for approximately 85% of total annual sales and consist of sales to food retailers and wholesalers such as supermarket chains, independent grocers, superstores, warehouse clubs, and major pharmacy chains. Food service sales account for approximately 15% of total annual sales and consist of sales to restaurants, hotels, hospitals, schools and wholesalers serving these institutions. The Company’s national brands are sold in various packages under several proprietary trademarks, including Antico, Arte Nova, Bistro Mundo, Bombay, Canton, Everfresh, Fairlee, Flavür, Fruité, Grown Right, miSangrina, Mont-Rouge, Oasis, Orange Maison, Pomme de Cœur, Rich n’ Ready, Rougemont, Ruby Kist, Sunlike, Tropical Grove as well as under trademarks for which the Company is a licensed user such as Allen’s, Canadian Club, Del Monte, Graves, Mitchell’s, Nature’s Best, Old South and Tetley. On an annual basis, the

Company’s sales are geographically broken down as follows: approximately 56% of the Company’s sales are in Canada, 43% in the United States and 1% in other countries. The Company is involved in apple and cranberry processing and cans corn-on-the-cob. These processing activities take place mainly from August to November. Processing the harvested crops increases inventory levels during the last quarter of the year. Overall Performance The Company’s sales amounted to $1,022.2 million in 2012, up $261.9 million (34.5%) from $760.3 million in 2011. CPC generated $417.1 million in sales in 2012. CPC’s sales had totalled $178.6 million for the period of August 13, 2011 (the date when CPC began operating under the Company’s control) to December 31, 2011. Excluding CPC’s sales, the Company’s sales were up $23.4 million (4.0%) from 2011. This sales growth came mainly from greater sales of the Company’s national brands, a favourable sales mix, and price increases introduced in response to higher raw material costs. The favourable impact of these factors was mitigated by lower sales volumes of private labels and a significant increase in trade spending. The Company’s operating profit for the year ended December 31, 2012 totalled $85.5 million, up $25.2 million from last year. CPC’s operating profit was $34.4 million during 2012. For the period of August 13, 2011 to December 31, 2011, CPC had operating profit of $10.6 million, but this amount included $6.4 million in acquisition-related costs. Excluding the impact of the CPC acquisition, the 2012 operating profit increased by $1.4 million (2.7%) from 2011. It should be noted that, during the second quarter of 2012, the Company realized a $1.5 million gain on the sale of a facility and land located in Ruthven, Ontario. The Company’s financial expenses rose from $13.9 million in 2011 to $24.1 million in 2012. This $10.2 million increase was largely attributable to the financings related to the CPC acquisition. “Other (gains) losses” went from a loss of less than $0.1 million in 2011 to a $2.9 million loss in 2012. The 2012 loss came primarily from $2.6 million in losses resulting from a change in the fair value of interest rate swaps related to CPC’s debt. Profit before income taxes totalled $58.5 million in 2012, up $12.1 million from $46.4 million in 2011. An income tax expense at an effective rate of 23.0% (25.4% in 2011) brought the 2012 profit to $45.0 million, up $10.4 million from $34.6 million in 2011. Profit attributable to the Company’s shareholders totalled $43.9 million for basic and diluted earnings per share of $6.29 for 2012. In 2011, profit attributable to the Company’s shareholders stood at $34.5 million, resulting in basic and diluted earnings per share of $5.12. It should be noted that, for 2012, CPC’s profit added $7.9 million to the profit attributable to the Company’s shareholders, whereas in 2011, CPC’s profit together with all of the acquisition-related transactions (including an exchange gain on U.S. cash and cash equivalents) had added approximately $0.1 million to the profit attributable to the Company’s shareholders.

Cash flows from operating activities generated $101.5 million during 2012, while they had generated $45.8 million last year. In 2012 and 2011, CPC’s operating activities generated cash of $35.1 million and $10.0 million, respectively, leaving a difference of $30.6 million on a comparative basis with Canadian operations. Financing activities used $46.6 million in 2012 while they had generated cash flows of $318.0 million last year. During 2012, CPC’s financing activities used $21.2 million in cash but had generated $251.2 million during 2011, leaving a difference of $92.2 million on a comparative basis with Canadian operations, almost entirely attributable to the funds raised for the CPC acquisition. Investing activities used $24.9 million during 2012 while they had used $412.4 million last year. During 2012 and 2011, CPC used $8.0 million and $394.6 million, respectively, in cash flows, leaving a difference of $0.9 million on a comparative basis with Canadian operations. At year-end 2012, cash and cash equivalents totalled $22.2 million compared to a bank overdraft of $8.0 million and $15.7 million in bank indebtedness at year-end 2011. Selected Financial Highlights (in thousands of dollars, except per share amounts)

Years ended December 31

2012

2011

2010 (1)

Sales $1,022,218 $760,258 $536,245

Operating profit 85,516 60,347 50,183

Profit before income taxes 58,512 46,386 45,188

Profit 45,030 34,582 31,976

Profit attributable to the Company’s shareholders 43,946 34,471 31,976

Basic and diluted earnings per share 6.29 5.12 4.86

Dividend declared per share for Class A and B shares

1.23

1.19

1.14

Total assets 800,028 798,041 368,858

Long-term debt $282,456 $312,451 $79,553

(1) Figures restated and presented in accordance with IFRS.

On August 12, 2011, the Company, along with members of the Pappas and Lassonde families, completed the acquisition of CPC for a total cash consideration of US$400.9 million. Accordingly, the 2011 comparative figures include the results of CPC from August 13, 2011 and acquisition-related transaction costs, while fiscal 2012 includes 12 months of CPC operations. At $1,022.2 million, the Company’s 2012 sales rose by $261.9 million from the $760.3 million reported in 2011. The 2011 sales had increased $224.1 million from $536.2 million in 2010. Sales growth between 2011 and 2012 was mainly attributable to the CPC acquisition, which added $238.6 million to sales. Excluding CPC’s 2012 and 2011 sales, the Company’s sales rose $23.4 million owing mainly to price increases introduced in response to higher raw

material costs. Sales growth between 2010 and 2011 was mainly attributable to CPC’s 2011 sales that had totalled $178.6 million. Excluding these sales, the 2011 sales rose $45.5 million from 2010 owing mainly to higher volumes of both national brands and private labels. The restatement of 2010 comparative figures to reflect IFRS did not have an impact on the 2010 sales. The Company’s operating profit for 2012 stood at $85.5 million, up $25.2 million from last year. CPC’s contribution to the 2012 operating profit was $34.4 million. In 2011, CPC’s operating profit had totalled $10.6 million but had included $6.4 million in acquisition-related costs. Excluding CPC’s 2012 and 2011 operating profit, the Company’s 2012 operating profit would have been up $1.4 million from 2011. It should be noted that, during the second quarter of 2012, the Company realized a $1.5 million gain on the sale of a facility and land located in Ruthven, Ontario. The operating profit in 2011 had increased $10.1 million from 2010. Excluding CPC’s 2011 operating profit, the 2011 operating profit would have decreased $0.5 million from 2010. This decrease is mostly explained by $2.8 million in costs related to the CPC acquisition and increases in the Canadian-dollar cost of raw materials, partly offset by the positive impact of higher sales. The restatement of certain 2010 figures to reflect IFRS increased operating profit by $0.3 million from the originally reported operating profit. Profit attributable to the Company’s shareholders for 2012 totalled $43.9 million compared to $34.5 million in 2011 and $32.0 million in 2010. This increase in profit between 2012 and 2011 is mostly explained by CPC’s contribution. It should be noted that, for 2012, CPC’s profit added $7.9 million to the profit attributable to the Company’s shareholders, while in 2011, CPC’s profit, when combined with all of the acquisition-related transactions (including the exchange gain on U.S. cash and cash equivalents) added approximately $0.1 million to the profit attributable to the Company’s shareholders. The increase in profit between 2011 and 2010 is explained by a $0.1 million favourable impact of the CPC acquisition and by the after-tax impact of a $2.4 million increase in operating profit derived from the Company’s Canadian activities. The $2.0 million increase in total assets between 2011 and 2012 was mainly due to the combined impact of the following factors: (i) a $22.2 million increase in cash and cash equivalents, as the Company’s cash flows from operating activities exceeded cash flows from financing and investing activities; (ii) a $6.8 million increase in accounts receivable resulting mainly from higher trade accounts receivable and discounts receivable; (iii) a $4.6 million decrease in inventories mainly due to less abundant crops; (iv) a $5.9 million decrease in other current assets mainly due to a decrease in taxes receivable, the settlement of a $1.5 million claim with a supplier in 2012, and the receipt of a $1.6 million security deposit; (v) an $11.1 million decrease in other intangible assets due mainly to their amortization; and (vi) a $3.3 million decrease in deferred tax assets due to the tax depreciation of goodwill. Excluding CPC, total assets decreased by $15.2 million between 2010 and 2011; this decrease was mainly due to the combined impact of the following factors: (i) a $40.9 million decrease in cash and cash equivalents used for the CPC acquisition; (ii) a $5.0 million increase in accounts receivable resulting from the higher sales in the last two weeks of 2011 compared to those of 2010 and larger rebates to be received from suppliers due to higher purchasing volumes; (iii) a $13.2 million increase in inventories related to the increase in raw material costs, a better

apple crop and higher volumes in anticipation of promotions at the start of 2012 and; (iv) a $4.1 million increase in derivative instruments. Operating Results For the year ended December 31, 2012, Lassonde Industries Inc. posted sales of $1,022.2 million, up $261.9 million (34.5%) from sales of $760.3 million in the previous year. CPC generated $417.1 million in sales in 2012. For the period of August 13, 2011 to December 31, 2011, CPC’s sales had amounted to $178.6 million. Excluding CPC’s sales, the Company’s sales were up $23.4 million (4.0%) from 2011. This year-over-year increase in sales was attributable to the combined impact of the following factors: (i) changes to selling prices that, despite a significant increase in trade spending, had a net favourable impact of $13.3 million on sales of national brands; (ii) a $7.9 million increase in the sales volume of national brands; (iii) a favourable sales mix that contributed to a $7.1 million increase in sales; (iv) a $0.3 million favourable foreign exchange impact; (v) a $3.8 million decrease in sales of private label products and (vi) an increase in slotting fees that had a $1.4 million unfavourable impact on sales. Cost of sales increased by 35.4%, rising from $548.9 million in 2011 to $743.4 million in 2012. CPC’s cost of sales stood at $319.6 million in 2012 versus $138.2 million in 2011, explaining most of the increase. Excluding CPC’s 2012 and 2011 cost of sales, the Company’s 2012 cost of sales was up $13.2 million or 3.2% year over year. This increase is lower than the 4.0% increase in sales, reflecting the combined impact of the following factors: (i) lower exchange rates on purchases paid in U.S. dollars partly offset by (ii) a sales mix that led to a higher cost of sales. Selling and administrative expenses (SG&A) rose 28.8%, from $151.0 million in 2011 to $194.6 million in 2012. CPC’s SG&A expenses stood at $63.1 million in 2012 versus $29.7 million in 2011, explaining most of the increase. Excluding CPC’s 2012 and 2011 SG&A, the Company’s 2012 selling and administrative expenses were up $10.2 million from 2011. This increase was mainly due to higher transportation expenses and to certain organizational adjustments resulting from the CPC acquisition. The “Gains (losses) on capital assets” item went from nil in 2011 to a $1.3 million gain in 2012. This gain stems mainly from the sale of a facility and land located in Ruthven, Ontario. The facility had been retired in the fourth quarter of 2011. For 2012, operating profit totalled $85.5 million, up $25.2 million from $60.3 million in 2011. Excluding CPC’s operating profit in 2012 and 2011, the Company’s 2012 operating profit was up $1.4 million (2.7%) year over year. Financial expenses for the year stood at $24.1 million, up $10.2 million from $13.9 million in 2011. This increase was mainly due to the financing of the CPC acquisition. “Other (gains) losses” went from a loss of less than $0.1 million in 2011 to a $2.9 million loss in 2012. The 2012 loss came primarily from $2.6 million in losses resulting from a change in the fair value of interest rate swaps related to CPC’s debt.

Profit before income taxes for 2012 totalled $58.5 million, up $12.1 million from $46.4 million in 2011. Excluding CPC’s contributions in 2012 and 2011, the Company’s profit before income taxes was down $1.4 million (3.1%) from 2011. For 2012, income tax expense stood at $13.5 million compared to $11.8 million in 2011. The effective income tax rate was 23.0%, down from 25.4% the previous year. The lower tax rate is explained by a favourable geographical mix of statutory tax rates and by the use of a $1.0 million capital loss carry-forward against the gain on disposal of the Ruthven facility. The Company had previously recorded a valuation allowance against the tax asset related to the loss. Profit for 2012 was $45.0 million, up $10.4 million from profit of $34.6 million recorded in the previous year. Profit attributable to the Company’s shareholders totalled $43.9 million for basic and diluted earnings per share of $6.29 in 2012. This amount reflects the allocation of a portion of CPC’s profit to a non-controlling interest. In 2011, profit attributable to the Company’s shareholders stood at $34.5 million, resulting in basic and diluted earnings per share of $5.12. It should be noted that, for 2012, CPC’s profit added $7.9 million to the profit attributable to the Company’s shareholders, whereas in 2011, CPC’s profit together with all of the acquisition-related transactions (including the exchange gain on U.S. cash and cash equivalents) had added approximately $0.1 million to the profit attributable to the Company’s shareholders.

Interim Results (in thousands of dollars, except basic and diluted earnings per share)

(1) Consists of operating profit to which depreciation and amortization, (gains) losses on disposals of capital

assets, and applicable impairment losses on property, plant and equipment are added. Note that EBITDA does not have a standardized meaning prescribed under IFRS and it is therefore unlikely to be comparable with measures of the same type presented by other issuers.

First quarter of 2011: Sales totalled $133.0 million in the first quarter of 2011, up 5.8% from sales of $125.7 million in the first quarter of 2010. The increase in sales was mainly driven by higher private label sales and a $1.0 million reduction in slotting fees. This growth was mitigated by higher trade spending and the unfavourable impact of exchange rates on sales denominated in U.S. dollars. Profit for the first quarter of 2011 stood at $6.7 million, up $1.9 million from profit of $4.8 million recorded at the end of the first quarter last year. Second quarter of 2011: The Company’s sales stood at $146.9 million in the second quarter of 2011, up 10.2% from sales of $133.3 million for the same period of 2010. This increase in sales was mainly attributable to higher sales in the retail segment combined with lower slotting fees. However, the increase in sales was mitigated by higher trade spending and by the unfavourable impact of exchange rates on sales denominated in U.S. dollars. Profit for the second quarter of 2011 stood at $6.4 million, down $0.5 million from profit of $6.9 million reported in the second quarter of 2010. It should be noted that the total after-tax impact of the CPC acquisition-related administrative expenses and exchange loss was approximately $1.9 million during the quarter.

2012 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Sales $277,325 $255,084 $256,403 $233,406 Operating profit 29,115 22,572 20,654 13,175 Profit before income taxes 22,512 14,391 13,699 7,910 Profit attributable to the Company’s

shareholders 17,525 10,315 10,490 5,616

Basic and diluted earnings per share 2.51 1.48 1.50 0.80 EBITDA (1) 37,194 30,566 27,068 21,041 Cash flows from operating activities

$34,618

$16,690

$32,825

$17,367

2011 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Sales $269,552 $210,822 $146,870 $133,014 Operating profit 24,934 13,758 11,065 10,590 Profit before income taxes 17,253 10,631 8,994 9,508 Profit attributable to the Company’s

shareholders 13,157 8,173 6,396 6,745

Basic and diluted earnings per share 1.91 1.20 0.97 1.03 EBITDA (1) 33,944 19,541 15,150 14,784 Cash flows (used by) from operating activities

$(209

)

$23,355

$2,115

$20,577

Third quarter of 2011: Sales totalled $210.8 million in the third quarter of 2011, up 54.2% from sales of $136.7 million in the third quarter of 2010. Sales from CPC added $63.6 million to the Company’s sales. Excluding the impact of the acquisition, the increase in sales was mainly due to price increases and higher sales of private label products. The third quarter profit for 2011 stood at $8.0 million, down 9.3% from profit of $8.8 million in the same quarter of 2010. It should be noted that the total unfavourable impact of all CPC-acquisition-related transactions (including the exchange gain on U.S. cash and cash equivalents) was approximately $2.9 million. Profit attributable to the Company’s shareholders was $8.2 million, resulting in basic and diluted earnings per share of $1.20 for the third quarter of 2011. This amount reflects the allocation of a portion of CPC’s loss to a non-controlling interest. For the same period of 2010, profit attributable to the Company’s shareholders stood at $8.8 million, resulting in basic and diluted earnings per share of $1.33. Fourth quarter of 2011: Sales totalled $269.6 million in the fourth quarter of 2011, up 91.7% from sales of $140.6 million in the fourth quarter of 2010. Sales from CPC added $114.9 million to the Company’s sales in the fourth quarter of 2011. Excluding the impact of the acquisition, the increase in sales was mainly due to higher sales of private label products and of the Company’s national brands. The fourth-quarter operating profit reached $24.9 million, up $7.3 million from $17.6 million reported for the fourth quarter of 2010. CPC’s contribution to operating profit stood at $9.6 million. Excluding CPC’s operating profit and acquisition-related costs of $0.4 million, the Company’s operating profit was $15.7 million, down $1.9 million from fourth quarter operating profit in 2010. Profit attributable to the Company’s shareholders was $13.2 million while it stood at $11.5 million in the same period of 2010. It should be noted that the total favourable after-tax impact of all CPC-acquisition-related transactions was approximately $2.6 million in the fourth quarter of 2011. First quarter of 2012: First-quarter sales totalled $233.4 million, up $100.4 million (75.5%) from the same quarter of 2011. Excluding CPC’s sales of $97.2 million, the Company’s sales were up $3.2 million from the same quarter in 2011, a 2.4% increase that was driven by a favourable sales mix and by price increases made necessary by higher raw material costs. The favourable impact of these two items was tempered by a slight decline in sales volumes. The Company’s operating profit totalled $13.2 million, up $2.6 million from operating profit of $10.6 million reported in the same quarter last year. Excluding the impact of the CPC acquisition, first-quarter operating profit was down $3.7 million year over year, mainly due to a $1.4 million increase in slotting fees, higher raw material costs and the impact of lower sales volumes on the Company’s operating profit. Profit attributable to the Company’s shareholders was $5.6 million, down $1.1 million from the same quarter in 2011. It should be noted that the total favourable impact of CPC’s contribution to the profit attributable to the Company’s shareholders was approximately $1.8 million. Second quarter of 2012: Second-quarter sales totalled $256.4 million, up $109.5 million (74.6%) from the same quarter of 2011. Excluding CPC’s sales of $96.7 million, the Company’s sales were up $12.8 million (8.8%) from the same quarter in 2011. This increase in sales was mostly driven by higher sales volumes of national brands. The Company’s operating profit totalled $20.7 million, up $9.6 million from operating profit of $11.1 million in the same quarter last year. Excluding the impact of the CPC acquisition, second-quarter operating profit

was up $2.5 million from the same quarter last year, due mainly to the positive impact of additional sales volume on profit margin and a $1.5 million gain on the sale of property, plant and equipment. Profit attributable to the Company’s shareholders was $10.5 million, up $4.1 million from the same quarter in 2011. Note that the total favourable impact of CPC’s contribution to the profit attributable to the Company’s shareholders of this quarter was approximately $1.1 million, whereas acquisition-related costs had an unfavourable impact of $1.9 million on the second-quarter profit of 2011. Third quarter of 2012: Third-quarter sales totalled $255.1 million in 2012, up $44.3 million (21.0%) from sales of $210.8 million in the third quarter of 2011. CPC’s sales accounted for $108.6 million of the Company’s sales in the third quarter of 2012. For the period of August 13, 2011 to October 1, 2011, CPC’s sales had amounted to $63.6 million. Excluding the impact of CPC’s sales, the Company’s third-quarter sales were down $0.7 million or 0.5% from the same quarter of 2011. This decrease was mainly due to a $0.8 million decrease in sales of private label products. The Company's operating profit for the third quarter of 2012 totalled $22.6 million, up $8.8 million from $13.8 million in the same quarter last year. CPC's operating profit was $10.1 million during the quarter ended September 29, 2012. For the period of August 13, 2011 to October 1, 2011, CPC's operating profit had totalled $1.0 million but it included $6.8 million in acquisition-related costs. Excluding the impact of the CPC acquisition, third-quarter operating profit was down $0.3 million year over year mainly due to lower sales. Profit attributable to the Company’s shareholders was $10.3 million for the third quarter of 2012, up $2.1 million from the same quarter in 2011. An analysis of the fourth quarter of 2012 is provided in a separate section of this report. Cash and Financial Position Financial Position Data (in thousands of dollars, except shareholders’ equity / total assets ratio) As at

December 31, 2012 As at

December 31, 2011

Total assets $ 800,028 $ 798,041 Shareholders’ equity 308,205 279,251 Shareholders’ equity / total assets 38.5 % 35.0 %

Total debt (1) $ 295,206 $ 334,996

(1) Including long-term debt, the current portion of long-term debt and bank indebtedness, when applicable.

Participating loans and retractable financial instruments are not included in total debt.

The comparability of consolidated statement of financial position items must take into account the conversion rate applicable to CPC’s closing balances, which went from $1.0170 CAD per USD as at December 31, 2011 to $0.9949 CAD per USD as at December 31, 2012.

As at December 31, 2012, the Company had total assets of $800.0 million, up $2.0 million from $798.0 million as at December 31, 2011. At the end of 2012, the Company’s working capital stood at $151.4 million for a ratio of 2.01:1 compared to $137.5 million and a ratio of 1.92:1 as at December 31, 2011. As at December 31, 2012, current assets totalled $301.4 million versus $286.6 million as at December 31, 2011. Cash and cash equivalents totalled $22.2 million as at December 31, 2012 compared to nil as at December 31, 2011. Cash and cash equivalents essentially consist of positive bank account balances netted against outstanding cheques issued to suppliers that have not yet cleared the bank account. Outstanding cheques are presented as a short-term liability under the bank overdraft item when the Company is in a net borrowing position, as was the case as at December 31, 2011. Accounts receivable totalled $103.8 million as at December 31, 2012 while they had totalled $97.0 million as at December 31, 2011 mostly due to a $2.8 million increase in trade accounts receivable as a result of higher sales and a $2.6 million increase in rebates receivable from suppliers. Inventories went from $166.7 million as at December 31, 2011 to $162.1 million as at December 31, 2012, a decrease that was mainly due to less abundant crops. Other current assets went from $16.2 million as at December 31, 2011 to $10.3 million as at December 31, 2012. The $5.9 million decrease was mainly due to a $2.5 million reduction in taxes receivable, the settlement of a $1.5 million claim with a supplier, and the receipt of a $1.6 million security deposit. As at December 31, 2012, the fair value of derivative instruments recorded as current assets was $1.0 million compared to $4.1 million as at December 31, 2011. This statement of financial position item reflects the favourable differences between the rates on foreign exchange forward contracts held by the Company to cover its foreign currency requirements for the next twelve months and the exchange rate as at December 31, 2012. Unfavourable differences are presented in current liabilities. Property, plant and equipment went from $237.5 million as at December 31, 2011 to $238.9 million as at December 31, 2012. This increase stems mostly from capital spending of $25.5 million, partly offset by $21.7 million in depreciation. Other intangible assets decreased from $141.0 million as at December 31, 2011 to $129.9 million as at December 31, 2012. In 2012, the Company acquired, for an amount of $1.5 million, a licence for the use of the Del Monte trademark for fruit juices and drinks in Canada. The amortization expense of other intangible assets stood at $9.9 million. The net defined benefit asset went from $1.1 million as at December 31, 2011 to $4.1 million as at December 31, 2012, an increase that reflects the $9.2 million funding of defined benefit pension plans less $4.1 million in expenses related to these plans and a $2.1 million actuarial loss recognized in other comprehensive income.

Deferred tax assets went from $3.3 million as at December 31, 2011 to nil as at December 31, 2012. This decrease was due to the tax depreciation of goodwill. The goodwill amount was $125.0 million as at December 31, 2012 versus $127.6 million as at December 31, 2011. The entire decrease was attributable to the closing exchange rate used when converting CPC’s goodwill. Current liabilities stood at $150.0 million as at December 31, 2012 compared to $149.2 million at the end of 2011. The bank overdraft was nil as at December 31, 2012, while it stood at $8.0 million as at December 31, 2011. The Company reduced its bank indebtedness balance to nil as at December 31, 2012 while the balance stood at $15.7 million as at December 31, 2011. Accounts payable and accrued liabilities went from $117.9 million as at December 31, 2011 to $133.6 million as at December 31, 2012, an increase that was mainly due to a $6.6 million increase in accounts payable and accrued expenses, a $6.1 million increase in trade marketing costs payable and a $2.5 million increase in salaries, deductions at source and accrued vacation payable. As at December 31, 2012, the fair value of derivative instruments recorded as current liabilities was $3.0 million compared to $0.2 million as at December 31, 2011. This statement of financial position item reflects the fair value of payments due in the next twelve months with respect to the interest rate swaps on CPC’s long-term debt and the unfavourable differences between the rates on foreign exchange forward contracts held by the Company to cover its foreign currency requirements for the next twelve months and the exchange rate as at December 31, 2012. Derivative instruments recorded as long-term liabilities increased from $0.6 million as at December 31, 2011 to $1.6 million as at December 31, 2012. This statement of financial position item increased mainly as a result of an unfavourable change in the fair value of long-term interest rate swap positions. Long-term debt totalled $282.5 million as at December 31, 2012 compared to $312.5 million as at December 31, 2011, a decrease that stems mainly from repayments on CPC’s debt. Since the acquisition, CPC has repaid US$41.9 million of its long-term debt, which is non-recourse to the parent company and its Canadian subsidiaries. Deferred tax liabilities went from $17.9 million as at December 31, 2011 to $19.0 million as at December 31, 2012. This increase was mainly due to the tax depreciation of goodwill offset by the tax impact of changes to the fair value of foreign exchange forward contracts. Other long-term liabilities stood at $38.2 million as at December 31, 2012 compared to $38.0 million as at December 31, 2011. This increase was primarily attributable to a $0.9 million increase in the retractable financial instruments liability offset by a decrease in the conversion rates applicable to CPC’s closing balances. Shareholders’ equity attributable to the Company’s shareholders was $290.9 million as at December 31, 2012, up $28.2 million from $262.7 million as at December 31, 2011. The foreign currency translation reserve decreased by $2.5 million while the hedging reserve

decreased by $3.0 million. Retained earnings increased $33.7 million to total $239.5 million for 2012. This increase mainly reflects the $43.9 million in profit attributable to the Company’s shareholders for 2012 less $8.6 million in dividends paid. Non-controlling interests went from $16.6 million as at December 31, 2011 to $17.3 million as at December 31, 2012. This amount represents a minority interest’s share in CPC’s comprehensive income. Contractual Obligations The principal repayments required on long-term debt, the minimum payments required on finance leases, the commitments under operating leases, the purchase commitments and other commitments for the coming years are as follows: (in thousands of dollars)

Contractual obligations

2013

2014 and 2015

2016 and 2017

2018 and thereafter

Long-term debt $13,750 $15,178 $211,166 $59,700 Finance leases 748 1,121 637 121 Operating leases 4,136 5,588 2,552 4,251 Purchase obligations 134,128 4,970 4,894 774 Other obligations (1) 132,553 8,972 20,275 9,661 Total $285,315 $35,829 $239,524 $74,507

(1) Consists of bank overdraft, bank indebtedness, accounts payable and accrued liabilities, derivative instruments and other long-term liabilities.

Analysis of 2012 Consolidated Cash Flows During 2012, cash flows generated by operating activities totalled $101.5 million compared to $45.8 million in 2011. The cash flows generated by CPC’s operating activities were $35.1 million in 2012 while they were $10.0 million for the period of August 13, 2011 to December 31, 2011. Excluding CPC’s activities, this leaves an increase of $30.6 million that was largely due to a change in non-cash working capital items that generated $30.6 million more than last year. This movement in non-cash working capital was mainly due to changes in inventory levels. Financing activities used $46.6 million in 2012, whereas they had generated $318.0 million in 2011. In 2012, CPC’s financing activities used $21.2 million while they generated $251.2 million for the period of August 13, 2011 to December 31, 2011. Excluding CPC’s activities, this leaves a difference of approximately $92.2 million for the Canadian operations. This difference is mainly due to the items related to the CPC acquisition in 2011 that did not repeat or that reversed in 2012, namely: (i) the repayment in 2012 of $15.7 million in bank indebtedness borrowed during the previous year for a total impact of $31.4 million; (ii) net proceeds from the issuance of 420,000 Class A shares that had generated $30.2 million in 2011; (iii) a non-controlling interest that had generated $15.9 million in 2011; and (iv) a $9.6 million increase in long-term debt in 2011 to complete the CPC acquisition. Investing activities used $24.9 million during 2012 while they had used $412.4 million last year. During 2012 and for the period of August 13, 2011 to December 31, 2011, CPC used

$8.0 million and $394.6 million in cash, respectively, leaving a difference of $0.9 million, mostly due to the $1.5 million acquisition in 2012 of a licence for the use of the Del Monte trademark for fruit juices and drinks in Canada, mitigated by $2.1 million in net proceeds from the disposal of property, plant and equipment on the sale of the Ruthven facility in Ontario. Financing and Cash (in thousands of dollars, except total debt / Company’s capital ratio) As at

December 31, 2012 As at

December 31, 2011

Bank indebtedness $ - $ 15,710 Current portion of long-term debt 12,750 6,835 Long-term debt 282,456 312,451 Total debt $295,206 $334,996 Total debt $295,206 $334,996 Shareholders’ equity 308,205 279,251 Company’s capital $603,411 $614,247 Total debt / Company’s capital (1) 48.9 % 54.5 %

(1) The total debt / Company’s capital ratio is obtained by dividing total debt by the Company’s capital, as shown in the table above.

As at December 31, 2012, the Company had a cash and cash equivalents balance of $22.2 million compared to a bank overdraft and bank indebtedness totalling $23.7 million a year earlier. The Company currently has access to various credit facilities for its Canadian operations, the amount of which could not exceed $70.2 million as at December 31, 2012 and 2011. Bank indebtedness drawn under these credit facilities amounted to nil as at December 31, 2012 and $15.7 million as at December 31, 2011. The bank indebtedness bears interest at the bank’s prime rate and/or the bankers’ acceptance rate prevailing on the markets plus stamping fees. The bank’s prime rate was 3.00% as at December 31, 2011, December 31, 2012 and March 28, 2013. In addition, in the third quarter of 2011, the Company secured, through one of its subsidiaries, a five-year US$50 million revolving credit facility for its U.S. operations. Amounts drawn under this credit facility stood at nil as at December 31, 2012 and US$10.1 million as at December 31, 2011. Terms and conditions of this credit facility are presented in Note 24 to the Company’s consolidated financial statements as at December 31, 2012. The Company believes that it will be able to ensure its development using cash flows from operating activities and currently available bank credit. The total debt / Company’s capital ratio went from 54.5% at the end of 2011 to 48.9% as at December 31, 2012. This change is mostly explained by a $39.8 million decrease in total debt and by a $28.9 million increase in shareholders’ equity. For 2013, the Company will maintain its capital asset investment program, mainly to increase production capacity, modernize equipment, and improve processes. In addition, the Company will continue investing in innovation and sustainable development. To the extent possible, new

capital assets will be financed using cash flows from operating activities, although the Company may turn to borrowing if interest rates and conditions prove advantageous. Share Repurchase Plan During the year ended December 31, 2012, the Company did not repurchase any Class A subordinate voting shares. The Company has decided to renew its share repurchase program. Consequently, the Company is allowed to repurchase, by way of a normal course issuer bid, up to 166,404 of its Class A subordinate voting shares between January 14, 2013 and January 13, 2014. The purchases will be made through the Toronto Stock Exchange at market prices in accordance with its policies and regulations. The repurchased Class A subordinate voting shares will be cancelled. During the year ended December 31, 2011, the Company repurchased for cancellation, by way of a normal course issuer bid, 1,000 Class A subordinate voting shares at an average price of $58.00 per share for a cash consideration of $58,000, of which $5,000 was applied against capital stock, $53,000 against retained earnings, and nil against contributed surplus. Dividends On February 14, 2013, the Company’s Board of Directors declared a quarterly dividend of $0.31 per share, payable on March 15, 2013, to the registered holders of Class A and Class B shares as at February 26, 2013. On an annualized basis, this dividend represents approximately 25% of the 2011 profit attributable to the Company’s shareholders. This is an eligible dividend. Stock Exchange Trading The shares of Lassonde Industries Inc. traded at prices ranging from $62.75 to $82.50 during 2012. The share price at closing on December 31, 2012 was $75.25 compared to $64.00 at the end of 2011, up 17.6%. Off-Balance-Sheet Arrangements As at December 31, 2012, the Company has letters of credit outstanding. Commitments are presented in Note 31 to the audited consolidated financial statements for the year ended December 31, 2012.

Fourth Quarter Consolidated Earnings Data (in thousands of dollars, except basic and diluted earnings per share)

Fourth quarters ended Years ended December 31,

2012 December 31,

2011 December 31,

2012 December 31,

2011

Sales $277,325 $269,552 $1,022,218 $760,258 Operating profit 29,115 24,934 85,516 60,347 Profit before income taxes 22,512 17,253 58,512 46,386 Profit 17,925 13,484 45,030 34,582 Profit attributable to the Company’s

shareholders 17,525 13,157 43,946

34,471

Basic and diluted earnings per share 2.51 1.91 6.29 5.12 EBITDA (1) 37,194 33,944 115,869 83,419 Cash flows from (used by) operating

activities

$34,618

$(209

)

$101,500

$45,838

(1) Consists of operating profit to which depreciation and amortization, (gains) losses on disposals of capital assets, and applicable impairment losses on property, plant and equipment and intangible assets are added. Note that EBITDA does not have a standardized meaning prescribed under IFRS and it is therefore unlikely to be comparable with measures of the same type presented by other issuers.

Fourth-quarter sales totalled $277.3 million versus $269.6 million last year, a year-over-year increase of $7.7 million (2.9%). This increase is explained by the combined impact of the following factors: (i) a $5.7 million increase in sales of private label products; (ii) price increases that had a $5.6 million favourable impact on sales of national brands; (iii) a $2.0 million increase in the sales volumes of national brands; (iv) a $0.2 million decrease in slotting fees; (v) a $4.0 million unfavourable exchange impact; and (vi) a different sales mix that contributed to a $1.8 million decrease in sales. Cost of sales went from $195.9 million in the fourth quarter of 2011 to $195.7 million in the same quarter of 2012, down $0.2 million (0.1%). This decrease, when compared to a 2.9% increase in sales, reflects the combined impact of the following factors: (i) a decrease in the cost of certain concentrates and (ii) a lower exchange rate on purchases paid in U.S. dollars. Selling and administrative expenses went from $48.7 million in the fourth quarter of 2011 to $52.3 million in the fourth quarter of 2012, up $3.6 million (7.5%). This increase is larger than the increase in sales and is explained by higher transportation costs arising from greater volumes and by certain operational adjustments resulting from the CPC acquisition. The Company’s operating profit for the fourth quarter of 2012 totalled $29.1 million, up $4.2 million from operating profit of $24.9 million in the same quarter of 2011. The Company’s financial expenses went from $7.2 million in the fourth quarter of 2011 to $6.7 million in the fourth quarter of 2012. This $0.5 million decrease was mainly related to long-term debt repayments that resulted in a lower interest expense. “Other (gains) losses” went from a $0.5 million loss in the fourth quarter of 2011 to a $0.1 million gain in the fourth

quarter of 2012. The loss in 2011 stems mainly from $0.4 million in losses resulting from a change in the fair value of interest rate swaps related to CPC’s long-term borrowing. Profit before income taxes totalled $22.5 million in the fourth quarter of 2012, up $5.2 million from $17.3 million in the fourth quarter of 2011. Income tax expense went from $3.8 million in the fourth quarter of 2011 to $4.6 million in the fourth quarter of 2012. The effective income tax rate of 20.4% for the fourth quarter of 2012 was lower than the rate of 21.8% for the same period of 2011. This decrease in tax rate reflects end-of-year adjustments attributable to the geographical mix of statutory tax rates. Profit for the fourth quarter of 2012 totalled $17.9 million, up $4.4 million from profit of $13.5 million in the fourth quarter of 2011. Profit attributable to the Company’s shareholders totalled $17.5 million, resulting in basic and diluted earnings per share of $2.51 for the fourth quarter of 2012. It compares to $13.2 million in profit attributable to the Company’s shareholders for basic and diluted earnings per share of $1.91 for the same period of 2011. Analysis of Consolidated Cash Flows (in thousands of dollars) Fourth quarters ended Years ended December 31,

2012 December 31,

2011 December 31,

2012 December 31,

2011

Operating activities

$ 34,618 $ (209) $ 101,500 $ 45,838

Financing activities

(13,418) 8,536 (46,553 ) 318,001

Investing activities (6,132) (7,197) (24,867 ) (412,441 ) Increase (decrease) in cash and cash

equivalents 15,068 1,130 30,080 (48,602 ) Cash and cash equivalents at beginning 7,091

(9,227 )

(7,987

)

40,937

Impact of exchange rate changes on cash and cash equivalents 27

110

93

(322

)

Cash and cash equivalents at end $ 22,186 $ (7,987) $ 22,186 $ (7,987 )

During the fourth quarter of 2012, cash flows generated by operating activities totalled $34.6 million whereas they had used $0.2 million in the fourth quarter of 2011. This $34.8 million increase was mainly due to: (i) a $4.4 million increase in fourth-quarter profit compared to the same quarter of 2011; (ii) a $3.1 million decrease in cash flows related to the excess of pension funding over costs recognized in profit or loss due to a $2.0 million decrease in deficit funding; and (iii) a $24.4 million increase in cash flows generated by non-cash working capital items during the last quarter of 2012. Financing activities used $13.4 million in the fourth quarter of 2012, whereas they had generated $8.5 million during the same quarter of 2011. This $21.9 million change was mainly due to CPC acquisition-related items in 2011 that did not repeat in 2012, namely: (i) a

$7.0 million increase in bank indebtedness; (ii) a $10.0 million increase in long-term debt; and (iii) the addition of $5.0 million in participating loans reflected in other long-term liabilities. Investing activities used $6.1 million in the fourth quarter of 2012, whereas they had used $7.2 million in the same quarter of 2011. The $1.1 million variance was largely due to a decrease in acquisitions of property, plant and equipment. Financial Measures Not in Accordance with IFRS Non-IFRS financial measures have no standardized meaning prescribed under IFRS. They are therefore unlikely to be comparable with measures of the same type presented by other issuers. Working Capital and Working Capital Ratio The Company uses working capital as a financial measure to assess whether it has sufficient current assets to cover current liabilities. Working capital is equal to current assets minus current liabilities, whereas the working capital ratio is obtained by dividing current assets by current liabilities.

Calculation of working capital and working capital ratio

(in thousands of dollars, except the working capital ratio)

As at December 31, 2012 As at December 31, 2011 Current assets $ 301,433 $ 286,642 Current liabilities 150,040 149,168 Working capital $ 151,393 $ 137,474 Working capital ratio 2.01:1 1.92:1

Shareholders’ Equity to Total Assets The Company uses the shareholders’ equity to total assets financial measure to determine the shareholders’ investment as a proportion of the Company’s total assets. To calculate the shareholders’ equity to total assets ratio, the shareholders’ equity shown on the statement of financial position is divided by total assets.

Shareholders’ equity to total assets (in thousands of dollars, except the shareholders’ equity / total assets ratio)

As at December 31, 2012 As at December 31, 2011 Shareholders’ equity $ 308,205 $ 279,251 Total assets 800,028 798,041 Shareholders’ equity /

total assets ratio

38.5 %

35.0

%

Earnings Before Interest, Taxes, Depreciation and A mortization (EBITDA) Earnings before interest, taxes, depreciation and amortization is a financial measure used by the Company to assess its ability to generate future cash flows from its operating activities and pay its financial expenses. Earnings before interest, taxes, depreciation and amortization consists of operating profit, the depreciation and amortization shown in the consolidated statement of cash flows, (gains) losses on disposals of capital assets and any impairment losses on property, plant and equipment and intangible assets.

Calculation of Earnings Before Interest, Taxes, Depreciation and A mortization (EBITDA)

(in thousands of dollars)

Fourth quarters ended Years ended December 31,

2012 December 31,

2011 December 31,

2012 December 31,

2011

Operating profit $29,115 $24,934 $85,516 $60,347 Depreciation and amortization 7,894 9,010 31,622 23,072 37,009 33,944 117,138 83,419 (Gains) losses on disposals of

capital assets 185 -

(1,269 ) -

EBITDA $37,194 $33,944 $115,869 $83,419

CPC’s EBITDA, which is included in the Company’s consolidated EBITDA, totalled US$50.1 million (C$50.0 million) in 2012. Significant Accounting Estimates

In preparing consolidated financial statements in accordance with IFRS, management must exercise judgment when applying accounting policies and use assumptions and estimates that have an impact on the amounts of the assets, liabilities, sales and expenses reported in these consolidated financial statements and on the contingent liability and contingent asset information provided. These assumptions and estimates are regularly reviewed and based on past experience and other factors, including future events considered reasonable in the circumstances. The actual results of items subject to assumptions and estimates may differ from these assumptions and estimates. The main assumptions and estimates are presented below: Measurements of Sales Revenues from product sales are presented net of trade marketing costs. Rebate and allowance amounts are determined, in some cases, using assumptions based on estimates prepared using the Company’s past history and experience. Measurements of Assets When applying the future discounted cash flows model to determine the fair value of groups of cash-generating units (CGUs) to which goodwill is allocated, certain parameters must be used,

including estimates of future cash flows, discount rates and other variables; a high degree of judgment must therefore be exercised. Impairment tests on property, plant and equipment and other intangible assets are also based on assumptions. Any future deterioration of market conditions or poor operational performance could translate into an inability to recover the current carrying amounts of property, plant and equipment and other intangible assets. No impairment loss was recorded in 2012 and 2011 as a result of impairment testing. Fair Value Measurement of Financial Instruments Cla ssified in Level 3 The Company must make assumptions and use estimates to determine the fair value of participating loans and retractable financial instruments. The main assumptions made and estimates used include, among others, the discount rate, the future operating profit before amortization (EBITDA), and the net indebtedness of CPC based on expected free cash flows. The Company therefore exercises a high degree of judgment. If the assumptions and estimates made differ significantly from subsequently observed data, the difference would have an impact on the Company’s profit or loss and the amount recognized as other long-term liabilities in the consolidated statement of financial position. Business Combinations For business combinations, the Company must make assumptions and estimates to determine the purchase price allocation of the business being acquired. To do so, the Company must determine the acquisition-date fair value of the identifiable assets acquired and liabilities assumed. Goodwill is measured as the excess of the acquisition cost over the Company’s share in the fair value of all the identified assets and liabilities. These assumptions and estimates have an impact on the asset and liability amounts recorded in the consolidated statement of financial position on the acquisition date. In addition, the estimated useful lives of the acquired property, plant and equipment, the identification of other intangible assets and the determination of the indefinite or finite useful lives of other intangible assets acquired will have an impact on the Company’s profit or loss. Measurements of Defined Benefit Assets and Liabilit ies The Company’s measurement of defined benefit plan assets and liabilities requires the use of statistical data and other parameters used to anticipate future changes. These parameters include the discount rate, the defined benefit obligation, the expected rate of return on assets, the expected rate of compensation increase, the indexation rate of pensions paid, and the mortality table. If the actuarial assumptions are found to be significantly different from the actual data subsequently observed, it could lead to substantial changes to the amount of the pension cost recognized in profit or loss, the actuarial gains and losses recognized directly in other comprehensive income, and the net assets or net liabilities related to these obligations presented in the consolidated statement of financial position. The actuarial valuations for funding purposes were performed on September 30, 2012, January 1, 2012 and December 31, 2011, depending on the plan. During 2012, the Company wound up one of its defined benefit plans, resulting in a $0.3 million expense. The expected rate of return on plan assets was established based on the expected diversification of investments and the related weighted average return based on historical and prospective market analysis and management expectations. The expected rate of compensation increase

was established using data on market conditions from independent sources. Changes in these assumptions could have an impact on defined benefit costs and obligations. In 2011 and 2012, the Company funded $7.7 million and $9.2 million, respectively, in its defined benefit pension plans. Measurements of Income Tax Expense Preparation of the consolidated financial statements involves determining an estimate of, or provision for, income taxes in each of the jurisdictions in which the Company operates. The process also involves making an estimate of income taxes currently payable and income taxes expected to be payable or recoverable in future periods, referred to as deferred income taxes. Deferred income taxes result from the effects of temporary differences due to items that are treated differently for tax and accounting purposes. The tax effects of these differences are reflected in the consolidated statement of financial position as deferred income tax assets and liabilities. An assessment must also be made to determine the likelihood that the Company’s future taxable income will be sufficient to permit the recovery of deferred income tax assets. To the extent that such recovery is not probable, deferred income tax assets will have to be reduced. Management must exercise judgment in its assessment of continually changing tax interpretations, regulations, and legislation, to ensure deferred income tax assets and liabilities are complete and fairly presented. The use of interpretations and treatments that differ from the Company’s estimates could materially impact the amount recognized as deferred income tax assets and liabilities.

Future Accounting Changes

IFRS 9 “Financial Instruments” IFRS 9 “Financial Instruments” was issued in November 2009 and contains requirements for financial assets. It addresses the classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39 “Financial Instruments: Recognition and Measurement” for debt instruments with a new mixed measurement model that has only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends are recognized in profit or loss to the extent not clearly representing a return on investment; however, other gains and losses (including impairments) associated with such instruments remain in accumulated other comprehensive income indefinitely. In October 2010, the International Accounting Standards Board (IASB) amended IFRS 9 “Financial Instruments,” which replaced IFRS 9 “Financial Instruments” and IFRIC 9 “Reassessment of Embedded Derivatives.” This amendment provides guidance on classification, reclassification and measurement of financial liabilities and on the presentation of gains and losses, through profit or loss, of financial liabilities designated as measured at fair value. The requirements for financial liabilities, added in October 2010, largely replicate the requirements of IAS 39 “Financial Instruments:

Recognition and Measurement,” except with respect to changes in fair value attributable to credit risk for liabilities designated as measured at fair value through profit or loss, which would generally be recognized in other comprehensive income. This new standard applies to fiscal years beginning on or after January 1, 2015. Early application is permitted. The Company is assessing the impact of adopting this new standard on its consolidated financial statements. IFRS 10 “Consolidated Financial Statements” In May 2011, the IASB issued IFRS 10 “Consolidated Financial Statements,” which establishes principles for the preparation and presentation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 provides a single consolidation model that identifies control as being the basis for consolidation. The new standard describes how to apply the principle of control to identify situations when a company controls another company and must therefore present consolidated financial statements. IFRS 10 also provides disclosure requirements for the presentation of consolidated financial statements. IFRS 10 cancels and replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC-12 “Consolidation – Special Purpose Entities.” This new standard applies to fiscal years beginning on or after January 1, 2013. The Company believes that the adoption of IFRS 10 will not have an impact on its consolidated financial statements. IFRS 12 “Disclosure of Interests in Other Entities” In May 2011, the IASB issued IFRS 12 “Disclosure of Interests in Other Entities.” IFRS 12 incorporates, in a single standard, guidance on disclosing interests in subsidiaries, joint arrangements, associates and structured entities. The objective of IFRS 12 is to require disclosures that enable users of financial statements to evaluate the basis of control, any restrictions on consolidated assets and liabilities, exposures to risks arising from interests in non-consolidated structured entities and the share of minority interests in the activities of consolidated entities. This new standard applies to fiscal years beginning on or after January 1, 2013. The Company believes that the adoption of IFRS 12 will require the Company to provide additional disclosure on interests in other entities. This additional disclosure will be presented in the Company’s consolidated financial statements for the year ending December 31, 2013. IFRS 13 “Fair Value Measurement” In May 2011, the IASB issued a guide to fair value measurement providing note disclosure requirements. The guide is set out in IFRS 13 “Fair Value Measurement,” and its objective

is to provide a single framework for measuring fair value under IFRS. It does not provide additional opportunities to use fair value.

This new standard applies to fiscal years beginning on or after January 1, 2013. The Company believes that the adoption of IFRS 13 will not have a financial impact on its consolidated financial statements. The Company will present the required IFRS 13 disclosures in its consolidated financial statements for the year ending December 31, 2013. IAS 1 “Presentation of Financial Statements” In June 2011, the IASB amended IAS 1 “Presentation of Financial Statements” requiring entities preparing financial statements in accordance with IFRS to group together items of other comprehensive income (OCI) that potentially may be reclassified to the profit or loss section of the income statement and to separately group items that will not be reclassified to the profit or loss section of the income statement. The amendments also reaffirm existing requirements that profit or loss and OCI be presented as either a single statement or two consecutive statements. The amended version of this standard applies to fiscal years beginning on or after July 1, 2012. The Company believes that the adoption of the amended IAS 1 will not have a financial impact on its consolidated financial statements. The Company will present the new disclosure requirements in its interim condensed consolidated financial statements for the first quarter ending March 30, 2013. IAS 19 “Employee Benefits” In June 2011, the IASB amended IAS 19 “Employee Benefits” to improve the accounting for pensions and other post-employment benefits. The amendments make important improvements by:

• Eliminating the option to defer the recognition of gains and losses, known as the “corridor method” or the “deferral and amortization approach”;

• Simplifying the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income, thereby separating those changes from changes frequently perceived to be the result of day-to-day operations; and

• Enhancing the disclosure requirements for defined benefit plans, thereby providing better information about the characteristics of defined benefit plans and the risks to which entities are exposed through their participation in those plans.

The amended version of this standard applies to fiscal years beginning on or after January 1, 2013. The Company believes that the adoption of the amended IAS 19 will reduce the total defined benefit pension plan expense recognized in profit or loss and increase the net

actuarial losses recognized in other comprehensive income by a corresponding amount for a zero net impact on the Company’s comprehensive income. Moreover, adopting the amended version of IAS 19 will have no impact on the Company’s consolidated statement of financial position. For the year ended December 31, 2012, adopting the amended IAS 19 would have increased the Company’s profit by $247,000 ($235,000 for fiscal 2011) and reduced other comprehensive income by the same amount for a zero net impact on the Company’s comprehensive income. The new IAS 19 disclosure requirements will be presented in the Company’s consolidated financial statements for the year ending December 31, 2013. IFRS 7 “Financial Instruments: Disclosures” and IAS 32 “Financial Instruments: Presentation” In December 2011, the IASB amended IFRS 7 “Financial Instruments: Disclosures” and IAS 32 “Financial Instruments: Presentation” as part of its offsetting financial assets and financial liabilities project. IFRS 7 was amended to harmonize the disclosure requirements with those of the Financial Accounting Standards Board (FASB), while IAS 32 was amended to clarify certain items and address inconsistencies encountered upon practical application of the standard. The amended versions of IFRS 7 and IAS 32 apply retrospectively to fiscal years beginning on or after January 1, 2013 and on or after January 1, 2014, respectively. For IAS 32, early application is permitted. The Company believes that the adoption of the amended version of IFRS 7 will not have a financial impact on its consolidated financial statements. The Company will present the new disclosure requirements in its interim condensed consolidated financial statements for the first quarter ending March 30, 2013. As for IAS 32, the Company is assessing the impact of adopting this new standard on its consolidated financial statements. Annual improvements to IFRS (2009-2011 cycle) In May 2012, the IASB issued amendments to several standards as part of its annual improvement process:

• IAS 1 “Presentation of Financial Statements”: Clarification of the requirements for comparative information;

• IAS 16 “Property Plant and Equipment”: Classification of servicing equipment; • IAS 32 “Financial Instruments: Presentation”: Tax effect of distribution to holders of

equity instruments; and • IAS 34 “Interim Financial Reporting”: Disclosure of segment information in its interim

financial reporting for total assets and liabilities of a particular reportable segment. The amendments to these standards apply to fiscal years beginning on or after January 1, 2013. The Company believes that the adoption of these amendments will not have a financial impact on its consolidated financial statements. The Company will present

the required disclosures in its interim condensed consolidated financial statements for the first quarter ended March 30, 2013.

Uncertainties and Principal Risk Factors

The uncertainties and risk factors described hereafter are those likely to significantly affect the Company’s financial position or results. Not all contingencies have been addressed, and the risks or uncertainties in the following statements may not materialize or occur in the manner expected or have the anticipated consequences. Financial Instruments and Financial Risk Exposure Retractable financial instruments: On August 12, 2011, some members of the Pappas family reinvested $30,774,000 (US$31,107,000) in cash in the subsidiary holding 100% of CPC’s share capital for a beneficial ownership of 19.3%. Between year 4 and year 10 following the CPC acquisition, members of the Pappas family may request the purchase of their shares, subject to certain limitations. The per share redemption price shall be calculated as follows: 6.4 times the average annual EBITDA of CPC for the two full fiscal years preceding the redemption less outstanding debt plus cash on hand divided by the number of shares outstanding of CPC. At the closing of the business acquisition, the present value of the retractable financial instruments approximated the consideration paid by the Pappas family members. A $0.1 million expense representing the change in value of the retractable financial instruments was recognized in profit or loss during 2012. Participating loans: On October 26, 2011, the Company obtained unsecured participating loans totalling $5.0 million, issued by two Canadian financial institutions to a subsidiary. These loans bear interest at a rate of 8.5%, compounded monthly with semi-annual interest payments beginning in March 2012. The participating loans are tied to the performance of CPC and are repayable at the option of the lenders after three years, subject to a maximum per reference year, or at the option of the Company after seven years. In addition to any interest owing upon repayment, the amount repayable as principal of the participating loan is equal to 3% of 6.5 times the EBITDA of CPC for the four quarters preceding repayment, less debt, plus cash on hand. If demand for repayment is made by the lenders and leads to the Company defaulting on its other borrowings, the Company will have the option of repaying the participating loan through the issuance of Class A subordinate voting shares of the Company at 95% of the market price at that time. A $0.7 million expense representing the change in value of the participating loans was recognized in profit or loss during 2012. Interest rate risk: Interest rate risk is the Company’s exposure to increases or decreases in financial instrument values caused by fluctuations in interest rates. The Company is exposed to cash flow risk due to the interest rate fluctuations in its floating-rate interest-bearing financial obligations and cash

balances and fair value risk from its fixed-rate financial obligations. The Company strives to maintain an appropriate combination of fixed- and floating-rate financial obligations in order to reduce the impact of interest rate fluctuations. The derivative financial instruments used to synthetically adjust the CPC term loan’s exposure to interest rates are mainly interest rate swaps. With respect to its floating-rate financial obligations, a negative impact on cash flows would occur if there were an increase in the reference rates such as the rate of bankers’ acceptances (CDOR), the London Interbank Offered Rate (LIBOR) and prime rate; the impact would be positive in relation to its cash balances and interest rate swaps. A decrease in these same rates would have an opposite impact of similar magnitude. Long-term debts are used mainly in relation to the Company’s long-term obligations stemming from acquisitions of long-term assets and business combinations. Bank indebtedness and the revolving and operating line of credit are mainly used to finance the Company’s working capital and fluctuate according to seasonal factors specific to the Company. As at December 31, 2012, the Company has interest rate swap agreements to cover the effect of future fluctuations in interest rates (LIBOR), tied to the term loan facility of CPC, on the Company’s cash flows. Interest rate swaps are not designated in a hedging relationship. The change in fair value of swaps resulted in a $2.6 million expense in 2012.

Start Date End Date Type Weighted Average

Fixed Rate Floating Rate Notional Amount

as at Dec. 31, 2012 % $US September 2012 August 2015 Fixed-rate payer 1.220 3-month LIBOR 34,912,500 September 2012 September 2015 Fixed-rate payer 1.119 3-month LIBOR 114,400,000

Foreign exchange risk: Foreign exchange risk is the Company’s exposure to decreases or increases in financial instrument values caused by fluctuations in exchange rates. The Company’s exposure to foreign exchange risk stems mainly from cash and cash equivalents, other working capital items, intercompany balances and net investments in its foreign operations that use the U.S. dollar as functional currency. The Company is mainly exposed to foreign exchange risk on its raw materials purchases as well as on purchases of equipment denominated in foreign currencies. In addition, the Company concludes sales denominated in foreign currencies. The Company employs various strategies to mitigate this risk, including the use of derivative financial instruments and natural hedge management techniques. Under its foreign exchange policy, the Company must identify, by geographic segment, any actual or potential foreign exchange risk arising from its operations. The corporate treasury department provides the strategy to cover these risks. Foreign exchange risks are managed in accordance with the Company’s foreign exchange risk management policy. The objective of the foreign exchange policy is to mitigate the impact of foreign exchange rate fluctuations on the Company’s consolidated financial statements. The policy also prohibits speculative foreign exchange transactions.

The fair value of instruments that qualify for cash flow hedging is reported on the consolidated statement of financial position. The change in fair value related to the effective portion of the hedge of derivative financial instruments denominated in foreign currencies used as a cash flow hedge of anticipated foreign currency purchases is recognized in other comprehensive income and reported as an adjustment to inventories when the purchase is recognized. Losses on derivatives designated as cash flow hedges recognized in profit or loss amounted to $0.3 million in 2012 compared to losses of $5.7 million recognized in profit or loss in 2011. When a hedging relationship ceases to be effective, the corresponding gains and losses presented in the hedging reserve are recognized in profit or loss in the period in which the underlying hedge transaction was recognized. If a hedged item is sold, extinguished or matures before the end of the related derivative instrument, the corresponding gains or losses presented in the hedging reserve are recognized in profit or loss of the current period. Gains and losses arising from periodic remeasurements of derivative financial instruments that are economic hedges but that do not qualify for hedge accounting are recognized in profit or loss in “Other (gains) losses.” As at December 31, 2012, foreign exchange forward contracts used to hedge exchange rate fluctuations with respect to future purchases denominated in foreign currencies amounted to $162.8 million. Under these contracts, the Company is committed to purchase currencies at predetermined rates. As at December 31, 2012, the negative fair value of the contracts stood, on a net basis, at $0.5 million. It is presented under derivative instruments in the Company’s consolidated statement of financial position.

Foreign exchange contracts

Type Rate (C$)

Contractual amounts Net fair value

From 1 to 12 months Purchase 0.9812 to 1.0502 US$159,150,000 $(537,000)

From 1 to 12 months Purchase 1.2765 to 1.3182 €2,440,000 $60,000

The fair value of the derivative instruments was established using information obtained from the financial institution acting as counterparty to these hedging transactions. More details on financial instruments and the risk management thereof are provided in Notes 12 and 29 to the Company’s consolidated financial statements. Credit Risk The Company extends credit to clients in the normal course of business. Credit evaluations are performed on an ongoing basis, and the consolidated financial statements include allowances for losses, which are estimated by management based on past experience and its assessment of current economic conditions. Laws, Taxation and Accounting Changes made to laws, regulations, rules and policies that affect the Company as well as new accounting positions adopted by the relevant authorities may significantly affect the Company’s financial and operating performance. In complying with these changes, the Company may incur significant expenses.

Labour Relations Lassonde Industries Inc. has approximately 2,000 employees, many of whom are covered under collective bargaining agreements. Company policy is to negotiate collective bargaining agreements that allow the Company to remain competitive, that have durations that promote a favourable working climate in all segments, and that expire on different dates. Three collective bargaining agreements at certain Company plants will be expiring in 2013. Fair Value The fair values of cash and cash equivalents, accounts receivable, current investments, bank overdraft, bank indebtedness, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturities. The fair value of long-term debt as at December 31, 2012 was $19.5 million higher than its carrying value, while the fair value of long-term debt as at December 31, 2011 was $1.2 million lower than its carrying value. The Company determines this fair value using interest rates that it could obtain in the market at the end of each fiscal year. Competition The North American juice, drink, and specialty food markets are highly competitive. The Company competes against several regional, national and international competitors, some of which are very large. These factors contribute to higher trade marketing costs, discounts, and/or promotional rebates used to promote products with wholesalers and major retailers in Canada while they can affect the Company’s margins in the United States. Nevertheless, the Company believes that it competes effectively thanks to its customer relationships, the variety of its products and packaging portfolio, its propensity for innovation, its purchasing power and distribution networks, and, in Canada, its well-recognized trademarks.

Marketing and Concentration of Client Base Most of the Company’s sales are to the food retail and wholesale segment. This market is highly concentrated in Canada with five retailers controlling more than 70% of the market. It is also important to note that, in 2012, 28.6% of the Company’s consolidated sales are carried out with the three largest Canadian clients of Lassonde Industries Inc. As such, these retailers have significant buying and negotiating power with respect to the Company. Remaining sales are generated in the food service segment, which consists primarily of restaurants, hospitals, hotels, schools and wholesalers serving these institutions. On the U.S. side, there is a lower level of market concentration, with ten retailers representing slightly less than 60% of the retail market. It should be noted as well that no single client accounts for more than 10% of the Company’s U.S. sales. Supply of Raw Materials The Company buys raw materials that it processes into finished products. Fluctuations in raw material prices can therefore drive financial results upward or downward. The Company mitigates its exposure to major fluctuations in raw material prices by concluding, when necessary, fixed-price supply contracts with key suppliers. In addition, the Company diversifies its sources of supply in order to reduce its exposure to sourcing risks. As is the case with some of its competitors who use a similar packaging technology, the Company obtains a large

portion of its laminated board supplies from a single supplier. Furthermore, the impact of any increase in the price of foodstuffs on the results of the Company would be mitigated by its ability, in a competitive market, to transfer these increases to customers. Price increases may also result in downward pressure on sales volume. On a separate note, increases in the price of fuel could adversely affect the Company’s financial position if it was unable to raise its prices accordingly. Product Liability All food-processing companies are exposed to the risks related to the safety and integrity of their products. To reduce such risks, the Company upholds quality assurance procedures in all of its facilities. Additionally, the Company monitors food safety and wholesomeness through the adoption of quality systems under the Global Food Safety Initiative (GFSI) umbrella. The Company also adheres to government food safety initiatives such as FSEP/HACCP certification (Food Safety Enhancement Program / Hazard Analysis Critical Control Point system) in Canada. It is also compliant with the HACCP (juice) system required by the U.S. Code of Federal Regulations in its CPC plants. However, if such a risk were to materialize, in certain circumstances it could result in an expensive product recall and severely damage the Company’s reputation. Consequently, the Company maintains liability insurance coverage as a producer and has other coverage deemed to be in compliance with current industry practices. Regulatory Matters The production and distribution of food products and the impact of these activities on the environment, whether in Canada, the United States or elsewhere, are subject to legislation and regulations. If a law or regulation were amended, the resulting impact would depend on the Company’s ability to adapt, comply and assume the related costs. Changes to the legal and regulatory environment could have an impact on our operating costs and results. Such regulatory amendments might include changes to food and drug laws, labelling laws, accounting standards, tax laws, competition laws and environmental laws, including laws with respect to water rights and water treatment regulations. Such changes can have an impact on our results or increase our costs and liabilities. For example, regulatory changes to the tolerated levels of heavy metals in juices could make it more difficult for the Company to source certain juice concentrates for its U.S. business. The Company believes however that such changes would affect all juice producers and would not disproportionately harm the Company relative to the juice processing industry. The Company believes that its production and distribution activities, and their environmental impact, currently comply in all material respects with major government laws and regulations and also believes it has all the permits and licenses required by the nature of its activities. Integration of Acquisitions In 2011, the Company acquired CPC, which represent a significant portion of the Company’s sales. The size of this acquisition creates integration risk. Furthermore, the synergies being sought may take longer than expected to materialize.

Crisis Management and Business Continuity The Company has developed crisis management and business continuity plans for all its operations. A steering committee supervises and reviews the plans of all its subsidiaries. The plans include a number of back-up physical locations in the event of a disaster, generators in case of power failures, and an IT back-up system. Insurance The Company limits its exposure to operating risk by holding insurance with reputable and financially stable insurers. In addition, loss prevention and control programs have been implemented to reduce the financial impacts of operating risks. Claims In the normal course of business, the Company is exposed to various proceedings and claims. Lassonde Industries Inc. limits its exposure to such risk by holding insurance to cover the risk of claims related to its operations when such insurance coverage is available at a reasonable cost. According to the Company’s management, none of these proceedings or claims has nor will have a significant unfavourable impact on the Company’s business activities or financial position. Disclosure Controls and Procedures The Company’s Chief Executive Officer (CEO) and the Vice-President and Chief Financial Officer are responsible for setting and maintaining disclosure controls and procedures, as set out in National Instrument 52-109 issued by the Canadian Securities Administrators. Assisting them in this responsibility is the Disclosure Committee, which consists of key management personnel. The Disclosure Committee must be kept fully informed of any significant information relating to the Company so that it can evaluate said information, determine its importance, and decide on timely disclosure of a press release, where applicable. Management regularly reviews disclosure controls and procedures; however, they cannot provide an absolute level of assurance because of the inherent limitations in control systems to prevent or detect all misstatements due to error or fraud. Under the supervision of the Chief Executive Officer and the Vice-President and Chief Financial Officer of the Company, an evaluation was performed to measure the effectiveness of the controls and procedures used to prepare disclosure documentation, including this MD&A, the Annual Information Form, and the Management Proxy Circular. Based on this evaluation, the CEO and Vice-President and Chief Financial Officer concluded that the disclosure controls and procedures were effective at the December 31, 2012 year-end and, more specifically, that the design of these controls and procedures provides reasonable assurance that important information about the Company, including its consolidated subsidiaries, is communicated to them in a timely manner for the preparation of disclosure documentation.

Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance as to the reliability of the financial information and reasonable assurance that the financial statements were prepared, for financial reporting purposes, in accordance with IFRS. All internal control systems have inherent limitations and therefore internal controls over financial reporting can only provide reasonable assurance and may not prevent or detect misstatements due to error or fraud. Under the supervision of the CEO and the Vice-President and Chief Financial Officer, the Company has conducted an evaluation of the design of the controls and the effectiveness of internal controls over financial reporting as at December 31, 2012, based on the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management has concluded that, as at December 31, 2012, the Company was maintaining effective internal controls over financial reporting. There have been no changes to the internal controls over financial reporting that would have materially affected or been likely to have materially affected the Company’s internal control over financial reporting. Related Party Transactions In the ordinary course of business, the Company purchases apples and corn for processing from entities controlled by members of senior management. These purchases totalled $0.4 million in 2012 and were carried out under similar terms and conditions as purchases from arm’s length producers. Related party transactions are presented in Note 33 to the Company’s audited consolidated financial statements for the year ended December 31, 2012. Subsequent Events As of March 28, 2013, there is no subsequent event to report. Outlook Market data indicates that sales volumes of North American fruit juice and fruit drink producers declined in 2012. This downward trend was stronger in the first months of the year, while the Company has observed greater stability in industry volumes in recent months. In Canada, intense competition facing the Company’s national brands is putting sustained pressure on trade spending. The Company is responding to the changing competitive landscape and improving the strategic market positioning of its national brands through innovation. The Company expects the number of product launches in 2013 to exceed those of 2012 given the planned introduction of new products under the Del Monte brand. As such, the slotting fees

for 2013 as a whole will likely exceed those incurred in 2012. Since most new products will be launched at the start of the year, the Company expects to incur a large proportion of its slotting fees in the first quarter of 2013 while such fees had been evenly allocated between the first two quarters of 2012. As for sourcing, the prices of orange concentrates are trending higher while prices of apple concentrates have returned closer to historical levels. Price volatility remains a significant issue moving forward. Furthermore, the conversion rate on the Company’s U.S.-dollar purchases should have a negligible impact on results in 2013 compared to 2012. Foreign exchange forward contracts will help the Company to limit, to some extent, the impact of currency fluctuations on its results over the next twelve months. Lassonde Industries Inc. plans on maintaining its business model and management approach for the coming year. The Company will continue to monitor business opportunities that may improve its competitive positioning. Barring any major external shocks, the Company remains optimistic about its ability to slightly increase its consolidated sales in 2013 compared to 2012. Sales growth is expected to come from both the Canadian entities and from CPC, which generated sales of US$417.8 million (C$417.1 million) in 2012. Additional Information

As at December 31, 2012, the issued and outstanding capital stock of the Company consisted of 3,235,300 Class A subordinate voting shares and 3,752,620 Class B multiple voting shares. This Management’s Discussion and Analysis was prepared as at March 28, 2013 and is available on the Lassonde Industries Inc. website. Readers will also find this MD&A, the Annual Information Form, additional documents, press releases, and more information about the Company on the SEDAR website at www.sedar.com. Dividends – Fiscal 2013 The table below presents the current or expected dates of declaration, record and payment of dividends for fiscal 2013, all of which is subject to approval by the Board of Directors.

Declaration Date Record Date Payment Date February 14, 2013 February 26, 2013 March 15, 2013

May 10, 2013 May 22, 2013 June 14, 2013 August 9, 2013 August 21, 2013 September 13, 2013

November 13, 2013 November 25, 2013 December 13, 2013 March 28, 2013

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