MANAGEMENT’S DISCUSSION & ANALYSIS (CONT’D) Growth in the global supply of seafood is due to increased  aquaculture production and the stabilization of wild caught  species in most areas of the world, as illustrated in the  following chart: countries like Russia, Brazil, India and China that also increase  consumption of seafood products. The trend of increasing demand  was affected, at least temporarily, as a result of the global financial  crisis and the changed relationship between currencies of  producing and consuming countries. Demand from Europe,  especially Southern European countries, decreased significantly  due to the financial uncertainty surrounding the European Union.  However, in the longer term, we expect demand to continue to  increase, resulting in increases to prices of seafood. In 2014, we  expect raw material costs to decrease for several significant  species that we procure, due to both continued low demand in  Europe and increasing supply due to quota increases, although for  some species, such as shrimp, scallops and haddock, they are  likely to stay above recent historical levels due to continued supply shortages. Our strategic objectives for 2013, along with commentary thereon,  were: Globally, there has been considerable development in the  aquaculture industry both in finfish and shellfish species. This  trend is expected to continue. We currently procure aquaculture  products, including warm water shrimp, tilapia, pangasius (basa),  mussels, scallops and Atlantic salmon. Our strategy is to increase  the procurement of aquaculture products in the future as we  continue to expand shrimp, tilapia and pangasius sales and  investigate the feasibility and profitability of using more  aquaculture species. Despite procuring aquaculture products, the  vast majority of our seafood product sales are from wild caught fish.  Excluding sales from American Pride, aquaculture accounted for  23% of our sales in 2013, as shown in the following chart: 2013 was the first year for this multi-year goal to focus on driving  innovation across the organization through standardization and  system optimization in the purchase of materials, inventory  management, product rationalization, and shipping, both into  North America and to customers. We buy approximately 30 species of seafood from 20 countries. Our  customers deserve and expect great customer service and we need  to manage inventory at reasonable levels in order to achieve our  financial targets. Our inventory management can improve. This is a big challenge that touches most parts of the organization.  However, with focus and hard work we can become the industry  leader in supply chain management, which will be a powerful  competitive advantage difficult for our competitors to achieve. In the first quarter of 2013, we expedited the closure of our plant in  Danvers and increased production at our manufacturing facilities  in Newport News and Portsmouth, and relocated U.S. food service  distribution to Newport News. During this transition, plant  throughput rates decreased at Newport News and Portsmouth as they integrated new products into their respective production  facilities. Restoring these production issues was an organizational  priority for the remainder of 2013 and as a result, less resources  were available than planned to focus on optimizing our supply  chain, slowing progress on this goal. However, several initiatives  were initiated related to this strategic goal and in 2014, driving  costs out of our supply chain and taking advantage of our growing  infrastructure, will be a larger focus for the Company than it was in 2013. This goal is a multi-year goal as well. Prior to 2013, we had been  working towards a goal to earn $100 million of Adjusted EBITDA by 2015; however, based on our financial performance in 2012 and the Icelandic USA Acquisition, we believed we would achieve $100 million in Adjusted EBITDA in 2013 and changed this goal to $150 million of Adjusted EBITDA by 2015. Through a  combination of supply chain excellence, internal growth and  acquisition, we believe we can increase Adjusted EBITDA to  $150 million. Globally, demand over time is expected to increase faster than  supply, resulting in increases in seafood costs. These increases in  demand come about as a result of increasing disposable incomes in  16 HIGH LINER FOODS INCORPORATED 2013 Strategic Goals  1. Supply Chain Optimization 2. Profitable Growth  30 0 5 10 15 20 25 Percentage 10 26% 11 26% 12 22% 13 23% 09 27% Percentage of Invoiced Sales  from Aquaculture Species 1995 1997 1999 2001 2003 2005 2007 2009 2011 20 100 80 60 40 120 140 160 Aquaculture Capture 0 Million MT  Global Fisheries Production  Share of Capture and Aquaculture