ManageMent’s Discussion anD analysis Management believes that the Company’s financial results are more meaningful to management, investors, analysts and any  other interested parties when financial results are adjusted by the gains/losses from financial derivative instruments and  from embedded derivatives. These adjusted financial results provide a more complete understanding of factors and trends  affecting the business. This measurement is a non-GAAP measurement. Management uses the non-GAAP adjusted results of the Company to measure and to evaluate the performance of the  business through its adjusted gross margin, adjusted EBIT and adjusted net earnings. In addition, management believes that  these measures are important to our investors and parties evaluating our performance and comparing such performances  to our past results. Management also uses adjusted gross margin, adjusted EBIT and adjusted net earnings when discussing  results with the Board of Directors, analysts, investors, banks and other interested parties. The results of operations would therefore need to be adjusted by the following: The mark-to-market adjustment represents the variation between all derivative contracts at the end of each reporting  quarter as compared to the mark-to-market value of the contracts that were present in the previous measured quarter and to  the initial value of all new contracts entered during that time period. The year-end mark-to-market adjustment is the total  of all these quarterly results. A mark-to-market loss of $7.2 million was recorded in fiscal 2013 compared to a loss of $5.7 million in fiscal 2012 related to  sugar futures contracts. The Company recorded a mark-to-market loss of $1.2 million on natural gas contracts compared to  a $3.6 million loss in fiscal 2012. Although natural gas prices continue to decline slightly in 2013, the mark-to-market loss  decreased compared to the previous year as contracts at higher prices expired in 2013. Foreign exchange forward contracts  and embedded derivatives, on which foreign exchange movements have an impact, had a combined mark-to-market gain of  approximately $0.4 million for the year compared to a mark-to-market loss of $5.0 million in fiscal 2012. The cumulative timing differences are as a result of the fact that mark-to-market gains or losses are recognized by the  Company only when sugar is sold to a customer and when natural gas is used. In addition as explained under “Use of  Financial Derivatives for Hedging” on pages 10, 11 and 12 of this MD&A, the gains or losses on the sugar and related foreign  exchange paper transactions are largely offset by corresponding gains or losses from the physical transactions being the sale  and purchase contracts with customers and suppliers. The year-end adjustment is the total of all quarterly results. This  adjustment is added to the mark-to-market results to arrive at the total adjustment to cost of sales. For fiscal 2013, the total  cost of sales adjustment is a gain of $2.7 million to be deducted from the consolidated operating results while a total cost of  sales loss of $24.3 million was added to the consolidated operating results in fiscal 2012 to arrive at the adjusted operating  results of these two years. The Company also recorded a mark-to-market gain of $1.8 million in fiscal 2013 for the mark-to-market of an  interest rate swap under finance income, as compared to a mark-to-market gain of $2.1 million in fiscal 2012, as recorded  mark-to-market losses from the previous years are reversed from the passage of time of the 2008 interest rate swap.  Annual Report 2013 15 Income / (Loss)  (In thousands of dollars)  2013 2012 2011 $ $ $ Mark-to-market adjustment  (7,972) (14,243) 20,278 Cumulative timing differences  10,646 (10,088) (7,104) Total adjustment to cost of sales  2,674 (24,331) 13,174