retail private label seafood products). Helping to offset these  declines, sales to club stores were very strong in both countries in  2013 and sales from our U.S. retail business increased compared to  2012 primarily as a result of increased sales from our  Sea Cuisine product line. Raw seafood costs were particularly volatile in 2013, and while  generally we can manage the impact of changing raw seafood  costs on our margins because of our inventory positions and  supplier contracts, rapid and significant decreases in certain  commodity seafood costs in the first quarter of 2013 led to  competitive pressures that forced us to lower our selling prices for  some products more quickly than our inventory costs came down. Our Standardized Free Cash Flow was very strong in the the first  three quarters of the year and allowed us to reduce our “Net  interest-bearing debt to Adjusted EBITDA” ratio, calculated on a  rolling fifty-two week basis, to 3.16x at the end of the third quarter,  compared to 3.40x at the end of fiscal 2012. The American Pride  Acquisition, early in the fourth quarter, was financed with existing  credit facilities, and resulted in a boost to sales in the fourth  quarter. The acquisition and increased working capital in the  fourth quarter of 2013 increased debt and the net interest-bearing  debt to Adjusted EBITDA ratio to 3.9x. The remainder of this section provides comparative information for  a five year period for key financial measures. The Company’s  financial performance in 2013 is discussed in greater detail in  Sections 5.3 and 5.4 of this MD&A. Overall, 2013 was a successful year and the Company reported the  highest sales and net income (on a reported and adjusted basis) in  its history. However, the year was not without its challenges and is  reflected in the $6.4 million decrease in Adjusted EBITDA in 2013  compared to 2012. Following is a high level summary of the events,  trends and circumstances that impacted our performance in 2013. Financial and operational highlights for the 2013 fiscal year  include (all comparisons are relative to fiscal year 2012, unless  otherwise noted): In the first quarter of 2013, we completed the integration of the  Icelandic USA Acquisition ahead of our original schedule, and  achieved the synergies expected with those activities. In  connection with this acquisition, to achieve additional synergies,  we closed our plant in Danvers and moved our U.S. food service  distribution center to Newport News, and incurred additional  operating and distribution costs that were not fully anticipated.  These costs primarily related to reduced operating efficiency at our  production facilities in our Newport News and Portsmouth  facilities as they integrated production from the closed Danvers  plant into their own. These production challenges continued  through the remainder of year, however to a lesser degree as the  year progressed, and had the effect of deferring the full impact of  the expected synergies related to closing the Danvers plant. Also in the first quarter of 2013, we negotiated favourable  amendments to our term loan and working capital facilities,  resulting in savings in financing costs in excess of $6 million on an annual basis. Throughout 2013, we experienced year-over-year declines in sales  from our U.S. food service business (reflecting soft sales in the U.S.  restaurant industry in 2013) and in sales from our retail private  label value-added products in Canada and the U.S. (reflecting the  overall trend in the seafood marketplace of decreased demand for  Sales in domestic dollars increased $14.0 million in 2013: • The American Pride Acquisition added $39.7 million to sales in 2013. • Sales increased by 0.5% to $947.3 million from $942.6 million (the  American Pride Acquisition added $39.7 million in sales);  • Reported net income increased by $29.2 million to $31.4 million  (or EPS of $2.01), compared with $2.2 million (diluted EPS of  $0.14); • Adjusted Net Income increased by $3.2 million to $41.3 million  (Adjusted Diluted EPS of $2.65) from $38.1 million (Adjusted  Diluted EPS of $2.46); • Adjusted EBITDA was $85.3 million, compared with $91.7 million;  • Adjusted Standardized Free Cash Flow was $28.1 million,  compared with $66.3 million; • Net interest-bearing debt to Adjusted EBITDA increased to 3.9x at  the end of fiscal 2013, compared to 3.4x at the end of fiscal 2012;  and • Integration of Icelandic USA was completed in the first quarter of  2013 and American Pride was acquired at the beginning of the  fourth quarter.  5.2  Overall Performance Sales  (in Domestic $000s) 09 10 $575,740 11 $672,293 12 $942,348 13 $956,307 $549,922 0 200,000 400,000 600,000 800,000 1,000,000 $1,200,000 ANNUAL REPORT 2013 31