## Adjusted Diluted EPS 

Adjusted Diluted EPS is Adjusted Net Income, as defined above, divided by the average diluted number of shares. 

## Adjusted EBITDA 

Adjusted EBITDA follows the October 2008 “General Principles and Guidance for Reporting EBITDA and Free Cash Flow” issued by the Canadian Institute of Chartered Accountants and is earnings before interest, taxes, depreciation and amortization, excluding: business acquisition, integration and other expenses; impairment of property, plant and equipment related to plant closures; increased cost of goods sold relating to purchase price allocation to inventory acquired over its book value; gains or losses on disposal of assets; and stock compensation expense. For purposes of the leverage tests calculated under the Company’s debt covenants, “EBITDA” is based on Adjusted EBITDA. 

Management believes that Adjusted EBITDA is a useful performance measure as it approximates cash generated from operations, before capital expenditures and changes in working capital and excludes non-operating items associated with acquisitions and synergy attainment, as well as market-based compensation related to stock price. Adjusted EBITDA also assists comparison among companies as it eliminates the differences in earnings due to how a company is financed. Adjusted EBITDA does not have a standardized meaning prescribed by generally accepted accounting principles and therefore may not be comparable to similar measures presented by others. 

## Adjusted EBIT 

Adjusted EBIT is Adjusted EBITDA less depreciation and amortization expenses. Corporate incentives and management analysis of the business are based on Adjusted EBIT. 

## Standardized Free Cash Flow 

Standardized Free Cash Flow follows the October 2008 “General Principles and Guidance for Reporting EBITDA and Free Cash Flow” issued by the Canadian Institute of Chartered Accountants and is cash flow from operating activities less purchase of property, plant and equipment (net of investment tax credits) as reported on the Consolidated Statement of Cash Flows. The purchase of property, plant and equipment as part of the acquisition of a business is not deducted from free cash flow. 

## Adjusted Standardized Free Cash Flow 

Adjusted Standardized Free Cash Flow is Standardized Free Cash Flow, adjusted to exclude the estimated value of the accounts receivable of American Pride Seafoods’ (“American Pride”) on the date High Liner Foods acquired their net assets, excluding their accounts receivable balance, which was estimated to be $15.5 million. See Section 5.1 “The American Pride Acquisition” for more details on this transaction. Due to the exclusion of accounts receivable from the net assets acquired, the increase in High Liner Foods’ accounts receivables of $17.4 million as at December 28, 2013, compared to December 29, 2012, primarily reflects accounts receivable related to American Pride’s sales. This increase is being reported in the Company’s Statement of Cash Flows as an increase in Fiscal 2013’s non-cash working capital requirements and has the effect of decreasing the net cash flows from operating activities compared to if we had acquired the American Pride’s accounts receivables as part of the acquisition, in which case approximately $15.5 million of this increase in accounts receivables would be reflected in the Statement of Cash Flows as cash used in investing activities. 

## Forward-Looking Statements 

This MD&A includes statements that are forward looking. Our actual results may be substantially different because of the risks and uncertainties associated with our business and the general economic environment. We discuss the principal risks of our business in Section 8 of this MD&A entitled “Risk Factors and Risk Management”. We cannot provide any assurance that forecasted financial or operational performance will actually be achieved. If it is achieved, we cannot provide assurance that it will result in an increase in our share price. See Section 9 entitled “Forward-Looking Information”. 

## 1. Vision, Core Businesses and Strategy 

## Company Overview 

High Liner Foods through its predecessor companies, has been in business since 1899. Its name has been a fixture in the Canadian seafood industry for more than eighty years and Captain High Liner  is one of the most highly recognized consumer brand icons in Canada. Today, High Liner Foods is the leading North American processor and marketer of value-added frozen seafood. 

In recent years, High Liner Foods has made a number of strategic acquisitions (“the Acquisitions”), including: 

• In December 2007, we acquired the North American manufacturing and marketing business of FPI Limited, including FPI’s prominent food service business headquartered in Danvers, Massachusetts (“MA”). 

• In December 2010, we acquired the business of Viking Seafoods, Inc. (the “Viking Acquisition” or “Viking”), a value-added business serving the U.S. food service seafood market from Malden, MA. 

• In December 2011, we acquired the U.S. subsidiary and Asian procurement operations of Icelandic Group h.f., (the “Icelandic USA Acquisition” or “Icelandic USA”), one of the largest suppliers of value-added seafood to the U.S. food service market, serving the market from Newport News, Virginia. 

• In October 2013, we purchased the American Pride Seafoods business from American Seafoods Group LLC, a value-added frozen seafood and scallop processing business serving the U.S. food service seafood market from New Bedford, MA. This acquisition (the “American Pride Acquisition”) is described in detail in Section 5.1 of this MD&A. 

High Liner Foods’ retail branded products are sold throughout the U.S., Canada and Mexico under the High Liner , Fisher Boy , Mirabel and Sea Cuisine  labels, and are available in most grocery and club stores. The Company also sells branded products to restaurants and institutions under the High Liner , Icelandic Seafood , FPI , Viking , Mirabel , Samband of Iceland  and effective October 1, 2013, American Pride Seafood  label, and is the major supplier of private label value-added seafood products to North American food retailers and food service distributors. 

Although our roots are in the Atlantic Canadian fishery, we purchase all our seafood raw material and some finished goods from around the world. From our headquarters in Lunenburg, Nova Scotia, we have transformed our long and proud heritage into worldwide seafood expertise. We deliver on the expectations of the consumer by selling seafood products that respond to their demands for sustainable, convenient, tasty, and nutritional seafood at good value. 

## 1.1 Vision 

At High Liner Foods, our reputation for delivering outstanding seafood products is an advantage in the competitive North American market. Our vision sets our overall direction and is: 

## To be the leading supplier of frozen seafood in North America. 

During the past several years, we were first focused on our vision, “ to be the the leader in value-added frozen seafood in North America ” 

