Detailed Version - UFA.com

2011 Annual Report 

UFA 

Announces 

Turnaround 

Year. 

“ The world we operate in today is vastly different from what 

we knew 10, 20 or 50 years ago, creating exciting new 

opportunities for our co-op. “ 

- Jim Laverick Chairman of the Board 

UFA 2011 Unabridged Annual Report 1

table of contents 

Corporate profile.....................................................................................................................................3 

Financial highlights & five-year summary.........................................................................................4 

Chairman’s message...............................................................................................................................5 

President & CEO’s message..................................................................................................................7 

Management’s discussion & analysis.................................................................................................13 

Financial statements........................................................................................................................... 28 

Board of directors................................................................................................................................ 53 

Senior management............................................................................................................................ 54 

Contact information............................................................................................................................ 55 


United Farmers of Alberta Co-operative Limited 

CORPORATE PROFILE 

Core Purpose 

To improve the economic and social well-being of our agricultural owners and their communities. 

Vision 

UFA is a market leading agricultural co-operative providing quality products, services and solutions that 

support our owners and customers and serve the rural community. 

Mission Statement 

We are a co-operative with a mandate to create value for our owners and customers through our 

unwavering commitment to strong financial performance; relevance to agriculture producers; and 

connection to the rural community. 

We excel at anticipating and responding to the changing needs of the people who live, work and play 

in the rural environment. 

We have an exceptional ability to identify, source and deliver relevant products, services and 

solutions at the right place and time. 

We champion a work environment that inspires a balance of progressive thinking, agility, 

collaboration and accountability for results. 

In doing so, we believe that UFA will become the preferred choice of owners, customers, business 

partners and top-performing employees who share our passion for this business. 

Core Values 

Accountability 

Agility 

Collaboration 

Integrity 

Performance 

Progressive thinking 

Respect 

2 CORPORATE PROFILE 



FINANCIAL HIGHLIGHTS & FIVE-YEAR SUMMARY 

(Stated in thousands of Canadian dollars) 2011 2010 2009 2008 2007 

Sales 2,108,450 1,742,941 1,603,863 2,161,230 1,805,977 

Margin 244,961 216,306 225,697 216,412 246,395 

Operating expense (189,767) (215,090) (180,823) (146,028) (136,516) 

Earnings before patronage allocation and income taxes 3,390 (88,530) (4,077) 45,099 91,626 

Patronage allocation 7,000 – – 15,700 35,200 

Distribution to members 

Cash portion of patronage allocation – – 3,648 8,223 8,166 

Issuance of Class A investment shares 14,093 15,012 16,023 15,924 13,860 

Dividends on investment shares 2,484 1,894 1,550 2,952 3,164 

Retirement of equity 6,119 6,287 6,163 3,852 3,645 

Total Distribution to members 22,696 23,193 27,384 30,951 28,835 

FINANCIAL HIGHLIGHTS & FIVE- YEAR SUMMARY 1 



CHAIRMANʼS MESSAGE 

It is always a humbling experience to stand in front of the delegate body and give an 

accounting of our stewardship as governors of your co-operative. In March 2011, 

having to report the worst financial results in our history was about as humbled as I 

ever want to feel. 

At that time, I said that we would need a Herculean effort from everyone – the board, 

management, front-line staff, support staff, agents and delegates – in order to rebuild 

this organization. I asked everyone to stay engaged, to recognize that we are making 

progress, to maintain their optimism and keep the faith. 

2011 was year one of our three-year rebuilding plan. Our very survival depended on 

turning the organization around, getting back on track and setting ourselves up 

for long-term sustainability. As an enterprise we went to the drawing board, broke it all down, made 

changes, eliminated bad habits, added new ideas, then, put it all back together and focused on execution, 

execution, execution. 

As expected, we have seen some excellent progress and even enjoyed a few big wins in the past 12 months. Our 

results have improved – dramatically. And perhaps even more importantly, they have improved for all the right 

reasons. Some businesses in Alberta are seeing better results just because the economy is better. While UFA has 

also benefited from a stronger economic environment, our results have improved because we took action. We 

started with a good plan. Our people executed those plans well. And now we are seeing better results. 

2011 was a year when we focused on the most pressing and urgent issues facing our co-operative. While burning 

platforms have consumed us through the past couple of years, we are also facing long-term challenges that can no 

longer be ignored or delayed. Like your business, our business – the way we operate, the needs of the customers 

we serve, our competitors and the industries in which we compete are experiencing rapid change. 

In the past UFA has struggled to keep pace with change. We have spent too much time, energy and resources 

attempting to hold on to the status quo. We have struggled with our efforts to remain relevant to the agricultural 

producer – and we have paid the price. 

A fundamental responsibility that we have, as governors and delegates, is to ensure the long-term viability and 

sustainability of the co-operative. The three year plan was only the first step of a long and challenging journey. The 

board has spent a lot of time considering the rest of that journey: where are we going and how will we get there? In 

considering those questions, we returned to our roots and carefully considered our mandate and core purpose “to 

improve the economic and social well-being of our agricultural owners and their communities.” We do this by 

delivering on membersʼ expectations for UFA: 

1. Enable my business. 

2. Protect my investment. 

3. Champion rural sustainability. 

As I explained last year, we must first serve the needs our members as customers. Once members begin to build 

equity, they expect that it will be used wisely to invest in and grow the business. When the business is healthy and 

growing – dividends are paid. Our members are not only concerned about the future of the co-operative they also 

care about the sustainability of the agricultural industry, the environment and the rural communities where they live 

and work and spend their leisure time. It used to be that the grain elevator was a symbol of a prairie townʼs 

prosperity and well-being. Today, a UFA farm and ranch store or petroleum agency is often that barometer of rural 

CHAIRMANʼ S MESSAGE 3 


health and sustainability. That is a heavy responsibility to carry. It is one that we cannot take lightly. It is something 

that our members remind us of every day. 

So how does UFA stay healthy, relevant and sustainable over the long-term? How do we reclaim our place as 

leaders in agriculture and the rural community? 

Traditionally we have thought of ourselves as farm and ranch supply retailers with a fuel distribution network 

operated by independent agents. Today we must think of ourselves as investors in a diversified portfolio of 

business opportunities. And we must be constantly evaluating those opportunities to ensure that they align with our 

objectives and core purpose and create true value for our owners. 

The board has determined that our portfolio will focus on prudent investments in the Agribusiness, Energy and 

Retail sectors. We will look to businesses within each of those sectors as opportunities that will help us remain 

viable, relevant and sustainable to agricultural producers and their communities. Over the next few years, you will 

see that strategy begin to take shape as we make investment decisions with each of our lines of business. 

We have had a good year. Our results are better than expected. Last year we announced a loss before patronage 

and income taxes of $88.5 million dollars. This year we managed to get back in the black and we do have surplus 

earnings. I am pleased to report that the board is recommending a patronage payment of $7 million to our 

members. While this is less than we want to deliver in coming years, it is a substantial improvement over last 

year‟s results. It represents a monumental accomplishment and a major turning point for UFA. 

I want to acknowledge and thank Bob and the management team for the work they have done. Compared to 

where we started, considering the enormity of the task they faced, what they have done to get us refocused and 

moving in the right direction is nothing short of spectacular. They deserve our thanks, our gratitude and most 

importantly, our on-going support. 

I also want to thank everyone in the organization who has pulled together and contributed to our progress. Our 

elected officials including the board and delegates, our managers, our front line staff, our field people, the agents – 

literally everyone who is part of the UFA family. Thank you for your efforts, your patience and your perseverance. 

Today, I am more confident and more optimistic than I was last year. We are back on track. We are moving in the 

right direction. We are making progress. But we are not out of the woods yet. Last year, I said rebuilding teams 

don‟t expect to win the championship in year one. We are now in year two of the three year plan. There is still 

much to be done. The second year of a three year plan is very much like part two of a three part movie. You‟re not 

at the beginning. You‟re not at the end. You‟re somewhere in the middle. The key is to stay focused and keep 

moving forward. 

Thank you. 

Jim Laverick 

Chairman of the Board 

4 CHAIRMAN‟S MESSAGE 



PRESIDENT AND CEO’S MESSAGE 

In September of 2011, UFA had the privilege to sponsor a benefit concert performed 

by Paul Brandt for the community of Slave Lake. It was entitled “Up from the Ashes”. 

In many ways, the 2011 performance of our co-operative could be described using 

the very same title. Coming off a very difficult period in our history, we entered 2011 

with a new financial platform, new business plans, and a renewed sense of optimism. 

The unanswered questions that remained were: 

Would our owners and customers support our new direction and efforts? 

Would our employees and agents engage in the execution of our plans? 

Would we have the support of our vendor community? 

Would we earn the confidence of our new financial stakeholders? 

I am happy to report the resounding answer to all of those questions is YES. We have delivered on our 

commitments. In doing so we have earned the renewed respect of our owners and I believe, enhanced our 

reputation with all of our key stakeholders. 2011 was a year of New Beginnings and we are well positioned for a 

strong performance in 2012. 

As a result of exceeding our operational commitments in 2011, we are once again in a position to pay a patronage 

dividend. This will amount to $7 million and will be allocated against Ag Fuels, crop inputs and livestock supply 

purchases made in 2011. The declaration of a dividend for 2011, albeit a modest one, signifies a dramatic turnaround 

for UFA. 

To our owners and customers I can simply say thank you. Thank you for sticking with us through the difficult times, 

and in helping us re-build the foundation of this proud co-operative. 

Alberta has one of the world‟s most productive agricultural economies, with more than 50 million acres used for 

crop and livestock production. This represents around 20 per cent of the value of Canada‟s total agricultural 

production and generates the country‟s highest cattle and second highest grains and oilseeds receipts. 

UFA is indelibly linked to this important sector of the Alberta economy. Our Core Purpose is to improve the 

economic and social well-being of our agricultural owners and their communities. We had briefly lost our way, but 

in 2011 we recommitted ourselves and as we move forward, all our business decisions will be weighed in the 

context of relevance to our owners and the agricultural communities they represent. 

AgriBusiness 

UFA‟s AgriBusiness is represented by a network of 35 Farm & Ranch stores and a professional team of people 

supporting the provision of goods and services to Agricultural professionals in Alberta. In addition, we have three 

bulk fertilizer plants, Spruceland Lumber in Fort McMurray and a skilled and knowledgeable sales team interacting 

with our members at the farm gate. 

2011 represented the first year in a three year turn-around strategy for our AgriBusiness. With strong leadership 

and focused execution, the results in 2011 were very positive, with all financial metrics exceeding targets. 

Member and customer acceptance to a wide array of changes has been positive, as reflected in our sales results 

and an increase in booking orders for the spring of 2012. 

PRESIDENT AND CEO‟S MESSAGE 7 


The changes executed in the business really represent the start of a transformation of our business. Key areas 

impacted in 2011 were: 

Initiated four new Ag „concept stores‟ in Consort, Vulcan, Fairview and Drayton Valley. The business model in 

these stores focuses on products that are core to Agricultural producers, and a more relevant in-store experience. 

Organized a new AgriBusiness marketing team, with focus on planning and execution of tactics in specific 

markets. In doing so, we have moved away from mass market tactics (flyers and general mail-outs) and 

moved towards local and targeted marketing tools. 

Consolidated the AgriBusiness logistics team into our Distribution Centre in Edmonton creating efficiencies for 

our business 

Completed planned changes to our Grain Marketing unit, which saw us execute an organized exit while 

honouring all contracts and commitments that were in place 

Significantly changed inventory management processes to focus on overall network logic to support local 

needs. This was further supported by implementation of a hub & spoke system to assist in optimization. 

In 2011 we entered into an agreement with AGRI-TREND to strengthen our ability to provide timely and relevant 

agronomic information and advice to our members and customers. This expertise will be of strategic importance as 

the AgriBusiness continues to progress. 

As we move forward in 2012 we will continue to focus on executing the fundamentals of our business, and to 

strengthen our relationship with owners and customers in all markets. Based on the success we saw in 2011, we 

will transition four existing farm and ranch supply stores to the Ag Concept store model and introduce new 

strategic initiatives for other specific markets. We will also further develop and implement the first stages of our 

Crop Inputs and Livestock strategies and will develop our e-commerce capabilities as a critical element of 

our co-operative. 

Petroleum 

UFA‟s Petroleum division had another year of outstanding financial performance in 2011, while focused on 

excellence in delivering a broad range of products and services through our network of 113 locations. 

The year was marked by a number of supply challenges as Edmonton refiners struggled to meet anticipated 

production levels at various times of the year. This was especially acute in the fourth quarter, where two refineries 

were simultaneously impacted, leading to supply disruptions. 

During these times of supply disruptions, UFA is able to mitigate some of the impact as a result of having multiple 

agreements with domestic refiners, and a developed capability to import product. In the fourth quarter of 2011 

there was insufficient product available in Western Canada and the US mid-continent to meet demand. As a result, 

many retail and cardlock operations throughout the industry suffered run-outs or were operating on restricted 

hours. UFA was certainly not immune to this situation. Supply agreements were optimized to the extent possible. 

In addition, product was imported from off-shore through a west coast terminal and transported by rail for delivery 

into our Alberta network. 

We continue to benefit from our extensive agency network that is firmly entrenched within local communities. Our 

Agents and their ongoing relationship with our members and customers, along with their passion to service their 

needs, are critical to maintain and grow our sales and to promote loyalty to the co-operative. 2011 saw a number 

of changes to our network with retirements of some of our long-term Agent partners. In each case, the retiring 

agent played an important role to ensure a seamless transition to the new agent, in order to ensure continued high 

levels of service for our members and customers. 

8 PRESIDENT AND CEO‟S MESSAGE 


In April, we successfully transitioned the network and our customers to biofuels. A substantial effort went into 

ensuring the changeover to biofuels would not adversely impact fuel quality in the network or in customer owned 

storage tanks. Once again, this transition was managed almost seamlessly. 

Bar-W Petroleum and Electric Limited, a division within the Petroleum organization also had a very strong 

operating performance in 2011, with strong revenues and a doubling of their expected contribution. 

The longer term business strategy for Petroleum, put in place four years ago, continues to be robust under the 

current set of business premises and will be advanced in 2012. The areas of focus include: 

Manage the business to protect our market share of Agricultural fuels, and grow our commercial market share 

within the constraints of our available supply 

Manage our agency network by continuing to promote excellence in all aspects of operations 

Develop and commence implementation of a refreshed network plan which will focus on strategic growth and 

re-developments 

Continue the roll out of our new cardlock operating system to provide customers with fast, easy, secure and 

most importantly reliable cardlock operations 

Wholesale Sports Outdoor Outfitters 

Wholesale Sports (WSS) has a network of 25 stores in Canada and the U.S. Our core customers are the men and 

women for whom hunting, camping and fishing is more than a recreational pursuit and more than a hobby – it is 

their passion. We have 11 stores in western Canada and 14 in the north western United States. In 2011 we closed 

an underperforming store in Fargo, North Dakota. 

2011 was a foundational year for WSS with new leadership focused on developing and improving business 

operations and fundamentals. We strengthened the leadership team including adding a new Marketing Vice- 

President, U.S. Director of Purchasing, Director of Supply Chain and a new Director of Operations for our 

Canadian business. 

Overall financial performance improved in 2011, but fell short of budget targets. Results were impacted by lower 

margins. In Canada this was mainly due to one-time charges for inventory shrinkage. In the U.S., the weak 

economy and lower levels of discretionary spending weakened our margins. Sales were soft in Q1 and Q2, 

however, they did strengthen considerably in the second half of the year as initiatives including new marketing 

programs increased traffic through our stores. 

Our strategic plan for WSS includes a three phase plan to improve our business model, drive business results and 

increase market share. 

Phase 1: Improve the foundational fundamentals 

Leadership, capabilities and structure 

Operational excellence 

– Loss prevention and EH&S launch across the network 

– Implement a new store staffing model in all stores to drive efficiencies and improve customer service 

– Introduce store merchandising standards program 

Phase 2: Optimize the business 

Introduce new vendor buying agreements 

Drive purchase volumes and buying power with strategic vendors including payment terms, discounts, vendor 

co-op, and volume rebate agreements 



Roll-out “Service First” model in all stores by Q2, 2012 

Accelerate marketing programs on a market specific tactical basis to support the integrated marketing plan 

Successful completion of phases one and two in 2012 will afford us the opportunity to move on to phase three and 

create strategic options for growth in the years to come. 

Centralized Services 

In 2011 as part of our “back to basics” approach to the business, we consciously aligned the priorities of our 

support groups to our business unit priorities with their focus to enable enhanced business performance. 

Our Finance organization made significant improvements in all key areas in 2011. Financial reporting, business 

planning, and credit and collections performance all exceeded plans. Our Treasury team successfully 

implemented the reporting requirements of our new Asset-Based Credit Agreement and managed these effectively 

throughout 2011. 

In Human Resources (HR) we focused on support to the significant AgriBusiness organizational changes that were 

implemented as part of our business strategy. Work was completed in respect to Total Rewards and performance 

management processes. 

In late 2011 we made changes to the leadership of our HR team, and have re-set our strategic direction in HR. In 

2012 we will continue to focus on enabling the business, while implementing process changes in the area of 

compensation as a result of a comprehensive Canada Revenue Agency (CRA) audit in 2011. As our economy 

continues to recover, the attraction, development and retention of strong team members is of paramount 

importance to UFA. 

Our Information Technology team delivered strong operational support in 2011, with day to day systems 

performance metrics, all exceeding established targets. Scan gun technology was employed in our Farm & Ranch 

stores to enable a more efficient inventory management system, and electronic invoicing was introduced to a 

number of our commercial petroleum customers. In addition, a new point of sale system was introduced to WSS 

Canada while our cardlock renovation project continued execution as planned. 

In 2012 our focus is to leverage the capabilities of our SAP system, to complete disaster recovery and business 

continuity plans, and to advance our e-commerce capabilities. Strategic and tactical alignment with business 

objectives and requirements remains at the forefront of all priorities. 

In late 2010, UFA recognized the need for full-time in house legal counsel, and in 2011 Legal Services was 

formed. Our General Counsel serves as a member of the senior leadership team, and is the first point of contact 

for all internal UFA and WSS legal matters. The Legal Services team is also responsible for insurance, real estate, 

our corporate policy office, and management stewardship of our Enterprise Risk Committee. 

At the start of 2011 our Health & Safety and Environment functions were dispersed in different parts of the 

organization. We amalgamated this group into one EH&S team, which also encompasses asset management and 

maintenance. The mandate of this team is to lead UFA in our objective to undertake all business activities in such 

a way that we meet or exceed all legislative requirements. Our primary focus is to provide a safe workplace for all 

employees, agents, members, customers, contractors and visitors. 

Our unwavering commitment is to create a safe working environment facilitated by an overarching “safety first” 

culture for the organization as a whole. 



In 2011 our Health & Safety performance slipped slightly, and steps were introduced in the fourth quarter of 2011 

to address this issue. We have refreshed and simplified our EH&S Management System, introduced specific 

accountabilities at all levels of the organization, and put into place a new EH&S Statement posted visibly at all of 

our locations. The statement reads: 

“The Safety and well-being of our employees, agents, members, customers and visitors is a key 

priority at UFA. Building a strong culture of safety begins with the expectations and programs we set 

as a co-operative, and lives daily in the actions we take as individuals. It requires dedication from each 

of us to make responsible decisions every day to create a safe environment for everyone at UFA”. 

This represents an important culture shift, and early 2012 results of site assessments indicate we are clearly on 

the right track. 

Customer Service Centre 

In 2011 our Customer Service Call Centre handled over 40,000 inquiries from our members and customers 

providing an effective single point of contact. 

Included in this number were more than 2,200 calls relative to our High Yield Member Investment Program. This 

program was a tremendous success and raised almost $32 million within a period of 21 weeks to reach our 

$40 million member loan target and is reflective of the loyalty that our members have towards their co-operative. 

The interaction with members we have had through the customer service call centre, as well as in the field at 

Farm & Ranch stores and Petroleum agencies, afforded us a unique opportunity to simply talk with our owners and 

share the progress being made throughout 2011. 

Community Investment 

In 2011 we executed a community investment program of $785,000 to promote, support, and celebrate our rural 

communities, particularly in the areas of youth, family and agriculture. Highlights of our accomplishments include: 

Launch of a new 4-H Loyalty program targeting youth in Agriculture 

Participation in Alberta Farm Safety programs which reached over 55,000 students in 2,700 classrooms 

Re-direction of a portion of centrally controlled funding to field management for more of a grass roots focus 

Sponsorship and participation in local rodeos and community events 

Sponsored Slave Lake Benefit concert 

Commenced preparatory work for the launch of 2012 International Year of the Co-operative 

Celebrated Farmer‟s Day at all our UFA Farm and Ranch Supply Stores and Petroleum Agencies, honouring 

our agricultural producers, families and members of rural communities with picnics, games and music. 

Incremental to this investment we also successfully ran the second year of our UFA Small Town Heroes contest. 

This touched many communities and met with an enthusiastic response as almost one hundred nominations were 

received. Throughout the duration of the contest, UFA awarded more than $13,000 cash to two grand prize 

winners and eight runners up to help enhance their communities. 

Two private concerts with Paul Brandt were held in the respective hometowns of our grand prize winners, 

Jeannette Vatter of Drayton Valley, and the Slave Lake Fire Department of Slave Lake. In addition, the concert in 

Slave Lake raised an additional $10,000 for the Pioneer Drop In Centre, and $14,000 was raised in Drayton Valley 

for the Drayton Valley Community Fund. 

Much to the delight of Alberta fans, a few impromptu performances by Paul Brandt also took place as the tour bus 

visited many UFA locations in Alberta on the way to the Drayton Valley and Slave Lake. 



In 2012 our focus will continue to shift more to grassroots level investments. Rural communities “are” UFA and this 

is where our efforts need to be expended. We will launch a scholarship program and a more expansive youth 

program, as well as leveraging communications capabilities, media, and social media. This is an exciting shift 

for UFA. 

Summary 

It is important for us to look at our business through the lenses of our key stakeholders, and in all areas we have 

made significant improvements in 2011. 

Our Owners/Customers have rewarded us with their business and demonstrated their loyalty through 

investments in the High Yield Member Investment Program. Operating changes made at the field level have been 

well received and supported. We have improved our communications to our membership through newsletters and 

improvements to our web site. Communication and engagement will be a priority for us in 2012. 

Our Employees/Agents are the backbone of this co-operative. Their commitment, enthusiasm, and drive in a year 

of substantive change has been critical to our success. We have improved our communications with all of our 

people, and the resulting alignment of objectives has translated into day to day operating improvements. Employee 

engagement survey results are much improved over 2010. We are re-engaging with our workforce, we are seeing 

success and we are moving in the right direction. 

Our Vendors have been supportive of our change initiatives in 2011. By focusing on strategic relationships we 

continue to grow our relevance to them, and theirs to us. 

Our Financial Stakeholders who support our Asset-Based Credit Agreement gave us very positive feedback in a 

meeting with them in October of 2011. At the core of this has been our demonstrated ability to deliver on our 

commitments. We have earned their confidence. 

Throughout the latter half of 2011, we worked closely with our Board of Directors to develop a broader view of 

strategic growth opportunities for the years ahead. In 2012, we will continue to focus on improving our relevance to 

our members and customers, strengthening the fundamentals of our business and commencing implementation of 

a select few growth initiatives that are in line with our core purpose as a co-operative. 

This cooperative has a proud tradition dating back over 100 years. We were wounded. However, we have indeed 

“risen from the ashes”. We are focused on the fundamentals of this business and we delivered on the 

commitments that we made for 2011. 

As we look forward to 2012 and beyond, we see tremendous potential for this co-operative, building on our 

success in 2011, focused on our Core Purpose of improving the economic and social well-being of our agricultural 

owners and their communities. 

I would like to take this opportunity to thank all of our employees and agents who have worked tirelessly to make 

2011 a successful year for UFA. I would also sincerely like to thank our owners and customers for your patronage 

and your loyalty. 

As a co-operative we are firmly back on track. 

Bob Nelson 

President and Chief Executive Officer 




MANAGEMENT’S DISCUSSION AND ANALYSIS 

The following management discussion and analysis (MD&A) provides management‟s perspective on UFA, our 

performance and our strategy for the future. This MD&A includes UFA‟s operating and financial results for 2011 

and 2010 and should be read in conjunction with our Financial Statements. 

Forward-looking Statements 

This disclosure contains statements that are forward-looking statements and include phrases such as “believe,” 

“expect,” “anticipate,” “intend,” “estimate,” “outlook,” “should,” “would”, “could” and other similar expressions. These 

forward-looking statements are based on certain assumptions and current expectations about future events. 

Inherent in these forward-looking statements are known and unknown risks, uncertainties and other factors beyond 

UFA‟s ability to control or predict. Readers are cautioned that actual results or events may differ materially from 

those forecasted in this disclosure because of risks and uncertainties associated with UFA‟s business and the 

general economic environment. Management does not intend to publicly update or revise this discussion and 

analysis as a result of new information, future events or otherwise. 

Non-GAAP Financial Measures 

UFA uses certain financial indicators within the MD&A that are not specifically defined by GAAP. These non-GAAP 

indicators may or may not be comparable to similar measures presented by other enterprises and are presented 

on a consistent basis within this annual report to members. UFA believes EBITDA (earnings before interest, tax, 

depreciation and amortization and patronage allocation) is a critical measure of its operating performance. EBITDA 

allows UFA to compare its operating performance on a consistent basis year over year. EBITDA excludes certain 

items that depend on accounting methods or reflect financing choices. 

Interest bearing debt is another non-GAAP disclosure, which provides a measure of all interest bearing borrowings 

both short-term and long-term, less unencumbered cash balances available for funding those payments. This 

indicator is important to UFA as it identifies future obligations that UFA must meet in order to comply with 

borrowing agreements, as well as the liquid funds available to meet those obligations. UFA also believes that the 

ratio of interest bearing debt to interest bearing debt and members‟ equity is an important non-GAAP measure that 

identifies how UFA finances its financial assets and operations, and the amount of risk UFA is willing to accept. 

Governance Structure 

The board of directors and management are unified in their belief that sound corporate governance practices are 

necessary for the achievement of strategic and operational goals, to the effective management and sustainability 

of UFA. In addition to the annual general meeting, the board meets at least five times per year with management 

to deal with general business and strategic matters. The board and its committees, as listed below, operate 

independently from management to protect owner interests. The existing members of the board have served 

between two and twelve years on the board at UFA. Board members have the right to seek independent advice 

should they so desire or deem necessary. 

The board of directors has established six standing committees being Audit; Enterprise Risk Management; 

Environmental, Health and Safety (EH&S); Governance; Human Resources Compensation; and History 

Committees. Each committee meets regularly throughout the year and provides regular updates to the Board. 

MANAGEMENT‟S DISCUSSION AND ANALYSIS 5 


Code of Business Ethics 

UFA continually works to make a positive impact in the communities we serve, ensuring daily business is 

conducted in a safe, fair, honest and respectful manner. Recognizing the importance of this, in 2011, the 

co-operative launched its Code of Business Ethics (COBE) Annual Review questionnaire. 

The questionnaire is intended to be an annual review of the COBE principles. It is not a sign-off of the master 

COBE; this was done last year and has been kept evergreen through the Human Resources new-hire process. In 

2011 Internal Audit introduced an interactive review, which takes between 5-10 minutes to complete. It includes a 

number of scenarios for discussion and feedback. 

Additionally, the Internal Audit team continue to manage UFA‟s toll free Integrity Hotline (1-877-258-4605) and 

Integrity Hotline email address (Integrity.Hotline@ufa.com). These hotlines are feedback tools our employees, 

agents and elected officials can use to identify and resolve ethical issues that arise through the course of business. 

We will continue to communicate our message in order that all our employees and business partners maintain 

awareness of our Code of Business Ethics. 

6 MANAGEMENT‟S DISCUSSION AND ANALYSIS 



2011 SUMMARY OF OPERATIONS 

Consolidated Income Statement 

For the period ended 

(Stated in thousands of Canadian dollars) 

December 25, 

2011 

December 26, 

2010 

Revenue $ 2,108,450 $ 1,742,941 

Cost of sales (1,863,489) (1,526,635) 

Gross margin 244,961 216,306 

Operating and administrative expenses (189,767) (215,090) 

Other income 2,012 1,629 

Earnings before the under noted (EBITDA) 57,206 2,845 

Depreciation and amortization (40,813) (42,413) 

Impairment of goodwill – (26,575) 

Interest (14,174) (21,152) 

Foreign currency exchange gain (loss) on advances to foreign subsidiary 1,171 (1,235) 

Income (loss) before patronage and income taxes 3,390 (88,530) 

Patronage allocation (7,000) – 

Income taxes recovery 3,847 23,744 

Net income (loss) $ 237 $ (64,786) 

Revenues were $2,108.5 million, up from $1,742.9 million in the previous year, driven primarily by volume and 

price increases in the Petroleum division. Volumes increased to 1,473.4 million litres, up by 106.6 million litres over 

2010, while average sales revenue measured in cents per litre (“cpl”) increased from 86 cpl in 2010 to 106 cpl in 

2011. Also contributing to the growth in consolidated revenues was the Wholesale Sports division, which saw an 

increase in sales of $9.6 million or 5% compared to 2010. AgriBusiness core sales grew in 2011, although total 

sales were marginally lower than previous year as a result of a planned exit from the grain trading business. 

Gross margin on consolidated sales was $245.0 million, up from $216.3 million in 2010. Approximately half of this 

growth was contributed by the Petroleum division‟s higher volumes and market-driven inventory valuation gains. 

Margins from AgriBusiness provided a $7.2 million improvement over the prior year. Factors contributing to the 

AgriBusiness margin growth included improved retail management, special promotions, favourable product mix, 

and improved inventory management. Wholesale Sports also showed gross margin improvement of $4.0 million 

over prior year due to higher volumes, including full year sales from the two Canadian stores that opened in 2010. 

Wholesale Sports margin percentages were pressured downwards due to strategic initiatives taken to reduce slow 

moving inventory, but were still higher than 2010. 

Operating and administrative expenses were $189.8 million, a decrease of $25.3 million over the prior year. A 

significant part of this decrease is from reduced staffing and a reduction in bad debt expense. In addition, UFA‟s 

comparative costs for fiscal 2010 were adversely impacted by a one time early termination fees of $13.9 million 

paid to long-term note holders. The Wholesale Sports division incurred an increase of $2.4 million in operating 

costs due to the full year‟s effect of two new stores that opened in 2010. 

Other income at $2.0 million increased slightly by $0.4 million compared to the prior year at $1.6 million. Other 

income in 2011 includes a gain of $3.1 million from sale of the Calgary farm store. The gain was offset by lower 

interest income and increased costs of the credit program offered by the Bank of Nova Scotia. 

EBITDA contribution was $57.2 million, compared to $2.8 million in 2010. 

2011 SUMMARY OF OPERATIONS 13 


The Petroleum Division had a strong year and contributed an additional amount of $15.0 million in EBITDA for 

2011 as compared with 2010. The volume increase of 106.6 million litres was due to improved economic activity, 

particularly related to commercial transport customers. Western Canada experienced a shortage of diesel fuel in 

late 2011. UFA was able to leverage existing relationships with refiners to secure additional product, as well as 

import product from off-shore, thus enabling the Co-operative to largely mitigate shortages in the agency network, 

while prices remained high. Inventory holding gains were $4.9 million in 2011 largely as a result of growth in 

commodity prices. 

Petroleum sales by product type in millions of litres are given below: 

The AgriBusiness Division went through a year of restructuring and business transformation. The supply chain 

model was optimized and operating costs were reduced by $4.5 million from the prior year. The sales and 

marketing strategy was modified and four concept stores were implemented. The trade areas were revamped and 

a stronger integration of store and support management was established. These initiatives were designed to bring 

the business closer to members. Gross margins increased by $7.2 million, through a combination of favourable 

product mix, price management and lower inventory provisions. EBITDA for 2011 represented a dramatic 

improvement of $11.8 million over the prior year. 

Sales by trade area is given below: 

14 2011 SUMMARY OF OPERATIONS 


The Commercial Construction Division incurred a negative EBITDA of $4.4 million in 2011. The losses are 

primarily due to cost escalations on the Slave Lake and Vauxhall projects. UFA is exiting from this line of business 

and will have substantially completed the remaining projects by end of March 2012. 

The Wholesale Sports Division had stronger earnings in 2011. EBITDA increased by $1.6 million, driven by 

sales growth of $9.6 million over the prior year. Gross margin increased by $4.0 million, and was higher as a 

percentage of sales, compared with 2010. Margins for the year were held back by the need to strategically 

manage obsolete and slow moving inventory. The 2011 results include a full 12 months of operations for two 

stores in Canada that opened in Regina and Langley, BC. During quarter 4, 2011, an underperforming store in 

Fargo, North Dakota was closed. 

Sales for 2011 compared with prior year is given below: 

Centralized Services include core activities to support Divisions within UFA, and the consolidated enterprise as a 

whole. The services are provided by functional departments that include Environment Health & Safety, Corporate 

Strategy, Member and Customer Experience, Information Technology, Legal, Risk and Real Estate, Human 

Resources and Finance. As part of the Co-operative‟s three year strategy, significant efforts have been undertaken 

to reduce these costs. In 2011 on a comparative basis with 2010, $8.0 million in expenses were eliminated, while 

the quality of output increased significantly. 

Capital Spending and Depreciation 

The net book value of capital assets, including goodwill and intangible assets was $284.2 million. During 2011 

UFA invested $13.4 million in property, plant and equipment and intangible assets, down from $22.4 million in 

2010. Major projects included the continuation of cardlock renovations and Wholesale Sports technology 

stabilization. 

2011 SUMMARY OF OPERATIONS 15 


A depreciation and amortization charge of $40.8 million was down from the prior year charge of $42.4 million. 

Capital spending for the five years ending 2011 was $204.6 million which resulted in depreciation increasing 

65 per cent over that period as disclosed in the following graph. 

Long Term Debt 

On December 13, 2010 UFA refinanced its debt through a new Asset-Based Credit Agreement with a syndicate of 

lenders. In 2011 UFA was in compliance with all covenants under the Credit Agreement. UFA further strengthened 

its liquidity position throughout the year and performed in accordance with the financial commitments made to the 

lending syndicate. Further, liquidity improved thereby improving availability of funds to $80.2 million (2010 – 

$37.1 million). 

Total financing costs for 2011 were $14.2 million, down from $21.2 million in 2010. 

Members’ Equity and Dividend Payments 

During 2011 UFA paid dividends of $2.5 million on the Class A Investment shares, as compared to $1.9 million in 

2010. This is due to an increase in investment shares to $103.0 million on December 25, 2011 (2010 – $93.9 

million). 

Earnings before Patronage and Income Taxes 

The net financial result for 2011 was a net income of $3.4 million before patronage allocations and income taxes 

(2010 – loss of $88.5 million). As a result of the earnings in 2011, most specifically related to UFA Co-operative 

Ltd., the board will be recommending to the assembly at the Annual General Meeting, a patronage allocation in the 

amount of $7.0 million for 2011. 

16 2011 SUMMARY OF OPERATIONS 



LIQUIDITY 

UFA depends on its ability to generate cash from operating activities and attract adequate supplies of capital from 

both internal and external sources to finance business operations, fulfill its strategic plans and maintain an 

enduring and sustainable organization. UFA‟s liquidity needs are affected by the seasonal business environment of 

the markets we serve. 

Working capital requirements increase significantly over the spring and early summer months when UFA is 

building its inventory in AgriBusiness and agricultural customers are financing their supplies. UFA‟s liquidity needs 

have been reduced by Farm Credit Corporation‟s extended credit finance plan provided to customers which allows 

accounts to remain outstanding until crops are harvested. 

In 2008 the price of crude oil reached a high of $140 per barrel. In order to meet working capital requirements, 

UFA entered into an Agreement with the Bank of Nova Scotia (“BNS”) to finance customer credit on accounts. The 

BNS credit program does not change the way owners and customers shop at UFA or make their payments on 

accounts. To date, over 68,000 customers representing balances of $76.8 million are financed under the program. 

This includes $9.9 million associated with funding received from BNS for which UFA has maintained the credit to 

customer accounts. With the Bank of Nova Scotia credit program UFA reduced its exposure to credit risk and 

received cash from the customer purchases instead of carrying them as accounts receivable. The program was 

designed to be transparent to the customer as the credit and account receivable functions continued to be 

managed within UFA. 

Internal Capital 

Internal sources of capital are reflected in the Members‟ Equity section of the Balance Sheet as Member 

Entitlements, Retained Earnings and Cumulative Translation Adjustments. At year-end 2011, internal sources of 

capital amounted to $325.3 million. 

External Capital 

On December 13, 2010 UFA refinanced the Credit Facility and Senior Secured Notes with a new Asset-Based 

Credit Agreement. The proceeds of the financing were used to repay all debt obligations under Senior Notes, with 

an aggregate principle amount of $150.0 million plus an accrued interest of $5.6 million and early termination fees 

of $13.9 million, and also to fully repay the Senior Secured Term Credit Facility (“Credit Facility”). 

The Asset-Based Credit Agreement provides for an asset based revolving credit facility in the maximum aggregate 

amount of $200.0 million and also has an accordion feature which permits UFA to request an increase in the 

revolving credit facility up to an additional amount of $50.0 million for a total availability of $250.0 million. Any 

increase under the accordion is not committed and must first be approved by the lenders. The Asset-Based Credit 

Agreement also includes a fixed asset facility (“Term Loan”) made available on a one-time only basis in the 

amount of $50.0 million. The Term Loan is repayable in equal quarterly installments based on a ten year 

amortization. The first payment was made on March 31, 2011. 

The amount available to be drawn under the Asset-Based Credit Agreement will vary from time to time based on 

the level of UFA‟s inventory and accounts receivable. The advances under the Asset-Based Credit Agreement 

cannot exceed the revolving loans borrowing base determined according to terms under the agreement that 

factors UFA‟s inventory and receivables. In addition, reserves are calculated under the Asset-Based Credit 

Agreement to take into account such factors as priority payables, and additional collateral requirements. 

LIQUIDITY 17 


The Asset-Based Credit Agreement has a three-year term and includes a clause for early termination fees should 

the Asset-Based Credit Agreement be terminated within two years of the initial date of closing. UFA can borrow 

under the agreement using Prime, London Interbank Offered Rate (“Libor”) and Banker‟s Acceptances and pricing 

is determined off a grid based on UFA‟s Fixed Charge Coverage Ratio. 

Another source of external capital is a voluntary member loan program (Member Loans). The Member Loan 

program had a balance of $8.5 million at year-end. This program allows members, employees and agents to invest 

in UFA and earn a rate of return equal to the bank prime rate as stated by the Royal Bank of Canada, plus 1.0%. 

Interest on Member Loans was $0.6 million (2010 – $0.5 million) and is included in short-term financing expense. 

Member Loans are unsecured and repayable on demand. The repayment of Member Loans is subject to the right 

of offset of any amounts owing to UFA, and is subject to UFA meeting the covenants contained under the 

Asset-Based Credit Agreement. 

In 2011 UFA introduced its High Yield Member Investment Plan (HYMIP) which helped to improve its liquidity and 

availability under the Asset-Based Credit Agreement. The program was rolled out as an exclusive opportunity for 

members, employees and agents to earn an above average interest rate and support the Co-operative‟s growth 

and sustainability. The investment plan was consistent with UFA‟s back-to-basics business approach, a program 

that was simple to understand and offered a competitive alternative for investment dollars. UFA offered members a 

three year investment plan that pays a fixed rate of 7% interest per year, and matures on June 15, 2014. The plan 

has no early redemption options, and pays interest semi-annually on June 15th and December 15th of each year. 

The minimum investment allowed under the program was $5,000 and all HYMIP loans are unsecured obligations 

of the Co-operative. The program was fully subscribed and closed in November of 2011. As at December 25, 2011 

the total outstanding obligation under this program was $31.8 million. 

18 LIQUIDITY 


Capital lease obligations at December 25, 2011 were $2.0 million with terms ranging between one and five years, 

with an average interest rate of approximately seven per cent. The majority of capital leases are for automotive 

and information technology equipment. 

Financial Covenants 

UFA is subject to certain financial and collateral covenants related to the Asset-Based Credit Agreement and was 

in compliance with all financial and non-financial covenants throughout 2011. UFA is required to provide monthly 

compliance reporting to its Agent under the Asset-Based Credit Agreement and also provides an annual forecast 

of its Fixed Charge Coverage Ratio and Availability. 

Cash Flow from Operations 

Cash flow from operations increased significantly from 2010 due mainly to the enhanced business performance. 

Working Capital and Debt Ratios 

Working capital ratio is the ability of the company to manage short-term financing requirements of the business. 

UFA‟s ratio of 2.5:1 is healthy and is an improvement over the prior year. 

LIQUIDITY 19 


Overall inventories continued their declining trend. The reduction of $11.5 million over last year was primarily due 

to lower Agribusiness and Petroleum inventories. Wholesale Sports inventories were higher than previous year. 

Management continues to drive efficiencies in supply chain and inventory management practices. 

Accounts receivable declined over last year as the business continues to improve its collection and credit 

practices. Accounts receivable metrics such as aging and average day‟s sales outstanding improved in 2011. 

20 LIQUIDITY 



MEMBER EQUITY 

UFA‟s equity structure is a source of capital and considerable financial strength. As a co-operative, UFA provides 

owners benefits by allocating a portion of its earnings to owners in the form of patronage allocation. 

In 2011 UFA established a Capital Structure Committee with representation from Management, the Board and the 

Delegate body to consider the needs of all stakeholders, as well as ensuring the capital structure would support 

the long-term sustainability of the co-operative. The Committee mandate focused on improving the predictability of 

equity redemption and encouraging capital to remain in the co-operative. 

Equity is regularly distributed to owners through Class A Investment shares (Investment shares) that pay dividends 

at a competitive rate. In addition, all member entitlements for members who turn 65 years of age where date of 

birth is on record, are converted into Investment shares, with the exception of one $5 member share. 

Patronage allocation, member shares, Investment shares and revolving equity are considered Member 

Entitlements of UFA. A summary of Member Entitlements is outlined in the notes to the audited financial 

statements. 

UFA is authorized to issue an unlimited number of member shares with a par value of $5. Member shares are 

redeemable at par value when the member reaches age 65, moves out of the trading area, or upon a member‟s 

death at the request of the member‟s estate. 

When the co-operative has Earnings before Patronage and Income Taxes, a patronage allocation is recommended 

and may be ratified by UFA‟s elected delegates at their annual general meeting held in March following the end of 

the fiscal year. The assembly approves the distribution as provided for under UFA‟s by-laws. Once approved by 

the delegates, the patronage allocation can be distributed. 

Revolving equity is non-interest bearing, non-redeemable by the owner except in specific circumstances and is 

converted into Investment shares over a 12-year period. 

Investment shares have a par value of $100, are non-voting, are redeemable at par value at the option of the 

holder subject to board approval, are retractable at par value at the option of UFA, and provide a dividend equal to 

the bank prime rate less 0.5 per cent. Dividends on the Investment shares were $2.5 million in 2011 (2010 – 

$1.9 million) and are charged against retained earnings. 

Actual distributions to owners in the five years ending in 2011 totaled $133.0 million, consisting of the cash portion 

of the annual patronage allocation, issuance of Investment shares, dividends on investment shares and retirement 

of equity. Over this five year period, cash distributions were $20.0 million. 

MEMBER EQUITY 21 



EMPLOYEE PENSION PLAN 

UFA administers a defined-benefit pension plan for employees of the parent company. There are no pension plans 

for employees of the subsidiaries. A registered pension plan, (the “RPP”) is registered in accordance with the 

Alberta Employment Pension Plans Act, and provides benefits for all salaried employees who choose to 

participate. The Plan is funded by contributions from UFA and from plan members. 

Pensions provided under this plan are related to the employee‟s income up to maximum pension limits set out by 

the Income Tax Act. A provision for pensions associated with employee income above RPP levels, is made under 

a second pension plan, called the Supplemental Employee Retirement Plan (“SERP”). This plan is not governed 

by any regulatory body, and UFA funds its obligations under this plan only as requirements arise. The employer 

contribution for the RPP were made in accordance with the Report on the Actuarial Valuation for Funding purposes 

as at December 31, 2010, dated June 29, 2011. The next actuarial valuation for funding purposes must be as of a 

date no later than December 31, 2013. 

UFA‟s transition to the Accounting standards for private enterprises (ASPE) resulted in a transition adjustment to 

retained earnings. UFA‟s accounting for pension is dependent on management‟s accounting policies and 

assumptions used in calculating such amounts. The impact of these adjustments has been highlighted in the notes 

to the financial statements. 

UFA‟s management pension committee manages both plans and is comprised of representation from 

management and employees. The pension committee acts in accordance with a governance plan, which sets out 

roles and responsibilities regarding the administration of the plan, and a statement of investment policies and 

procedures which sets out limits and guidelines for investment of the pension fund assets. The pension committee 

manages these two plans on behalf of the board with ultimate responsibility resting with the board. UFA‟s current 

investment policy identifies the benchmark asset mix as 60% equities and 40% fixed income. All equities are 

actively managed and the bench mark equity mix is split 60% Canadian, 20% US, and 20% other international. 

The assets of the RPP totaled $84.2 million at December 25, 2011 (2010 – $86.8 million), while the accrued 

benefit obligation, excluding unfunded SERP obligation, was $93.0 million (2010 – $93.8 million). The unfunded 

SERP obligation at year-end was $3.1 million, compared to $2.9 million in 2010. 

In 2011 UFA incurred net pension expense of $4.4 million, with $4.1 million related to current service costs. This 

compares to net pension expense of $4.6 million in 2010, of which $4.0 million related to current service costs. 

22 EMPLOYEE PENSION PLAN 



RISK MANAGEMENT 

UFA is exposed to various risks and uncertainties in the normal course of business. To mitigate these risks, UFA 

follows an enterprise risk management process to manage the major risks it faces. Each department and operating 

division is responsible for identifying all major risks that they face in their businesses as well as the cause of each 

major risk. These risks are then prioritized based upon the potential impact of such risk on the enterprise and the 

likelihood of occurrence. This process allows UFA to establish a risk profile for its business and develop the 

appropriate strategies to mitigate such risk. We believe that acceptance of some risk is both necessary and 

advantageous in any business, and is necessary to achieve UFA‟s vision. 

Financial Risk 

UFA undertakes certain transactions denominated in foreign currencies and, as a result, foreign currency 

exposures arise, which is discussed later in this report. UFA is exposed to foreign exchange risk on financial 

commodity contracts, which are denominated in foreign currencies, and on its investment in the United States 

subsidiary. Certain financial risks may be reduced through insurance or hedging programs, while other risks are 

prioritized in relation to the impact on the business and strategies are developed to mitigate the risk. 

UFA hedges its price risks on fixed-price petroleum contracts as outlined in the notes to the financial statements 

for risks associated with both market prices for petroleum products and fluctuations between the Canadian and 

United States currencies. Although UFA maintains and utilizes a highly effective hedging program, in relation to the 

adoption of accounting standards for private enterprises relating to hedges, UFA has elected not to utilize hedge 

accounting and has elected to recognize all income or expense related to the hedging activity immediately in the 

statement of earnings. 

Business Cycles and Commodity Risk 

UFA‟s business is affected by seasonal business cycles, in particular agricultural cycles. Risk is mitigated within 

the agriculture industry as different segments and areas may experience offsetting 

business cycles. UFA‟s diversified customer base does mitigate much of the risk of being economically dependent 

on the core owners. 

Petroleum sales revenue is closely linked to crude oil pricing, wholesale “rack back” margins and local 

supply/demand balances which impact rack forward margins. UFA follows a number of strategies to mitigate risks 

associated with this volatility. One strategy is centralized control over selling prices that allows UFA to react quickly 

to changes in purchasing prices from suppliers. UFA‟s exposure to price risk is limited to quantities carried in 

inventory, which is limited to tank capacity which usually represents less than 5% of sales. 

UFA may offer fixed price contracts to qualifying customers. To manage risks associated with fluctuating crude oil 

prices and maintain its desired margin, UFA offers these contracts only to financially sound customers that meet 

stringent credit policies. UFA purchases crude oil and foreign exchange swap agreements from lenders in the 

Credit Facility. This program benefits the customer since input costs are set and established which allows for 

better planning, budgeting and risk management. 

Credit Risk 

During 2009 UFA entered into an agreement with the Bank of Nova Scotia, allowing the Bank of Nova Scotia to 

extend credit to qualifying members and customers. UFA reduced its exposure to credit risk and received cash 

from the customer purchases instead of carrying them as accounts receivable. The program was designed to be 

transparent to the customer as the credit and account receivable functions continued with the same UFA staff. 

RISK MANAGEMENT 23 


For members and customers not moving to the Bank of Nova Scotia credit program, UFA continues to be exposed 

to credit risk on accounts receivable for approximately 40 to 45 days of regular sales, at any time throughout the 

year, as most accounts receivable are due by the end of the month following purchase. Although UFA offers an 

extended credit finance plan for crop inputs and grain bins whereby customers do not have to pay for these 

products until February 15 of the subsequent year, Farm Credit Canada provides the financing for the plan. 

UFA partly mitigates exposure to credit risk through the Bank of Nova Scotia credit program, diversity of its 

customer base and the large geographic area in which it operates. In addition, a full credit review and monitoring is 

conducted by an experienced credit department. UFA follows established policies regarding credit limits, payment 

terms and account reviews. In addition, delinquent accounts are followed up regularly, including engaging external 

collection and legal assistance when required. 

There is nominal exposure to credit risk in the subsidiaries as none offer credit programs to retail customers. 

Liquidity Risk 

UFA manages liquidity risk to ensure that it has sufficient liquidity to meet liabilities when they come due. UFA 

completed an Asset Based Credit Agreement in December 2010 to guarantee it had the financial capacity and 

sufficient access to cost effective financing sources to fund its capital and operating activities. This facility replaced 

the Bank Credit Facility and Senior Secured Notes. At December 25, 2011 UFA had current assets of 

$362.5 million to settle current liabilities of $145.8 million. All accounts payable, accrued liabilities and deferred 

revenue are subject to normal trade terms. 

UFA expects to be compliant with all of its financial covenants in 2012. 

Interest Rate Risk 

To manage interest rate risk, UFA utilizes short-term floating interest rate borrowings issued under the Asset 

Based Credit Facility and member loans program. UFA has not hedged any of the interest rate risk associated with 

short-term borrowings as it considers the risk to be acceptable. UFA no longer has exposure to interest rate risk on 

long-term debt raised under the Senior Secured Notes as the debt has been repaid in full. 

Foreign Currency Risk 

The acquisition of fifteen outdoor adventure stores in the United States exposes UFA to the impact of changes in 

the US dollar to the Canadian dollar exchange rate. For accounting purposes, the US operations are considered to 

be a self-sustaining and, therefore, the impact of changes in the foreign currency translation of the US operations 

balance sheet are recognized as Cumulative Translation Adjustments in UFA‟s Consolidated Balance Sheet. 

Advances of funds to and cash flow from the US operations also expose UFA to fluctuations in the value of the 

US dollar. Changes in the Canadian dollar value of the US dollar for advances to and cash flow from the US 

operations are reported in the Consolidated Statement of Income (Loss). 

UFA mitigates the risk of fluctuations of the Canadian dollar against the US dollar and the impact of UFA‟s financial 

results by hedging. 

24 RISK MANAGEMENT 


Environmental Health and Safety (EH&S) 

In 2011, UFA successfully developed a new Environmental, Health and Safety team made up of Health and 

Safety, Environmental and Asset Management/Maintenance professionals. The mandate of the team is to lead 

UFA in its objective to behave and execute its activities in an environmental and safe manner. The company is 

subject to environmental and occupational health and safety regulations under a variety of Canadian, US and other 

Federal, Provincial, territorial, and municipal laws and regulations. Some of the higher potential risk concerns for 

UFA that are or may be subject to regulation include: 

Release of fuel, chemicals and controlled substances to the environment 

Issues relating to land reclamation, restoration and human and wildlife habitat protection 

Matters associated with human health & safety 

Upgrading and maintenance of UFA's assets to current legislated requirements to minimize environmental, 

health & safety risk and increase network reliability. 

Failure to comply with laws and regulations result in the imposition of fines and penalties, liability for cleanup costs 

and damages, loss of important licenses and permits which may in turn have a material adverse effect on our 

business, financial condition, results of operations and cash flow. 

In 2011 and going forward into 2012 UFA has significant focus on evolving our Environment, Health and Safety 

programs awareness and culture. We have a refreshed EH&S Statement and have placed emphasis on key 

elements, including; streamlining and embedding our Environmental Management System, increasing the 

effectiveness of our facility assessments, placing more focus around our Certification of Recognition (COR) 

program and continuing to foster our Health and Safety culture, and internal reward programs. 

RISK MANAGEMENT 25 



FINANCIAL STATEMENTS 

Management’s Responsibility for Financial Statements 

The management of United Farmers of Alberta Co-operative Limited (“UFA”) is responsible for the preparation of 

the accompanying financial statements. The financial statements have been prepared in accordance with 

Canadian generally accepted accounting principles, which recognize the necessity of relying on management’s 

judgement and the use of estimates. Management has determined such amounts on a reasonable basis to ensure 

the financial statements are presented fairly in all material respects. 

Management’s responsibility to ensure integrity of financial reporting is fulfilled by maintenance of a system of 

internal accounting controls designed to provide assurance that transactions are authorized, assets are 

safeguarded and proper records maintained. Controls include a comprehensive planning system and processes to 

ensure timely reporting of periodic financial information. 

Final responsibility for the financial statements and their presentation to members rests with the Board of Directors. 

The Board carries out this responsibility principally through its Audit Committee. The Audit Committee meets 

separately with management and UFA’s external auditors, to review financial statements, discuss internal controls, 

the financial reporting process and other financial and auditing matters; all to satisfy itself that each party is 

properly discharging its responsibilities. The Audit Committee reports its findings to the Board for its consideration 

when the Board approves the financial statements prepared by management. 

The financial statements have been audited by PricewaterhouseCoopers LLP, the external auditors, in accordance 

with Canadian generally accepted auditing standards. The external auditors have had full and free access to 

management, the Audit Committee and the Board of Directors. 

Bob Nelson 

Peter Melnychuk 

President and Chief Executive Officer 

Chief Financial Officer 

February 29, 2012 February 29, 2012 

FINANCIAL STATEMENTS 1 



AUDITOR’S REPORT 

February 29, 2012 

Independent Auditor’s Report 

To the Delegates/Members of 


We have audited the accompanying consolidated financial statements of United Farmers of Alberta Co-operative 

Limited and its subsidiaries, which comprise the consolidated balance sheets as at December 25, 2011, 

December 26, 2010 and December 28, 2009 and the consolidated statements of income/(loss), retained earnings 

and cash flows for the 52 week periods ended December 25, 2011 and December 26, 2010, and the related 

notes, which comprise a summary of significant accounting policies and other explanatory information. 

Management’s responsibility for the consolidated financial statements 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in 

accordance with Canadian accounting standards for private enterprises, and for such internal control as 

management determines is necessary to enable the preparation of consolidated financial statements that are free 

from material misstatement, whether due to fraud or error. 

Auditor’s responsibility 

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We 

conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards 

require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance 

about whether the consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the 

assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud 

or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s 

preparation and fair presentation of the consolidated financial statements in order to design audit procedures that 

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 

entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the 

reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of 

the consolidated financial statements. 

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis 

for our audit opinion. 

2 AUDITOR’S REPORT 


Opinion 

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of 

United Farmers of Alberta Co-operative Limited and its subsidiaries as at December 25, 2011, December 26, 

2010 and December 28, 2009 and the results of their operations and their cash flows for the 52 week periods 

ended December 25, 2011 and December 26, 2010 in accordance with Canadian accounting standards for 

private enterprises. 

Yours truly, 

Chartered Accountants 

PricewaterhouseCoopers LLP, Chartered Accountants 

Suite 3100, 111 – 5th Ave S.W., Calgary, Alberta, Canada T2P 5L3 

T: (403) 509-7500, F : (403) 781-1825, www.pwc.com/ca 

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. 

AUDITOR’S REPORT 3 



CONSOLIDATED BALANCE SHEET 

As at 


December 25, 

2011 

December 26, 

2010 

December 28, 

2009 

Assets 

Current Assets 

Cash and cash equivalents (note 4) $ 1,237 $ – $ – 

Accounts receivable (note 5) 110,629 118,164 143,739 

Inventories 228,339 239,852 258,023 

Prepaid expenses and deposits 19,808 18,808 6,002 

Future income tax asset (note 11) 2,500 – 232 

Property held for resale (note 6) – 833 – 

362,513 377,657 407,996 

Property held for resale (note 6) 12,687 13,165 379 

Investments 862 862 1,223 

Other long-term assets 1,328 1,328 1,008 

Goodwill and intangible assets (note 7) 62,909 69,822 101,143 

Future income tax asset (note 11) 16,724 11,331 – 

Property and equipment (note 8) 221,330 246,547 283,045 

Liabilities and Members’ Equity 

Current Liabilities 

$ 678,353 $ 720,712 $ 794,794 

Bank indebtedness (note 4) $ – $ 16 $ 2,625 

Accounts payable and accrued liabilities (note 20) 120,324 123,208 148,934 

Deferred revenue (note 9) 10,982 10,709 15,318 

Member loans (note 10) 8,517 15,092 17,251 

Future income tax liability (note 11) – 116 – 

Current portion of long-term debt (note 12) 6,012 6,418 1,685 

145,835 155,559 185,813 

Long-term debt (note 12) 134,950 193,122 151,650 

Member loans (note 10) 31,827 – – 

Asset retirement obligations (note 13) 18,944 22,171 26,207 

Future income tax liability – – 2,222 

Long-term liabilities (note 14) 21,538 23,668 27,204 

Members’ Equity 

353,094 394,520 393,096 

Member entitlements (note 16) 209,614 208,438 214,386 

Retained earnings 133,069 135,316 201,996 

Cumulative translation adjustment (17,424) (17,562) (14,684) 

325,259 326,192 401,698 

$ 678,353 $ 720,712 $ 794,794 

On behalf of the Board 

Chairman 

Director 

See accompanying notes to consolidated financial statements 

4 CONSOLIDATED FINANCIAL STATEMENTS 



CONSOLIDATED STATEMENT OF INCOME (LOSS) 



December 25, 

2011 

December 26, 

2010 

Revenue (note 21) $ 2,108,450 $ 1,742,941 

Cost of sales (1,863,489) (1,526,635) 

Gross margin 244,961 216,306 

Operating and administrative expenses (189,767) (215,090) 

Other income 2,012 1,629 

Earnings before the under noted 57,206 2,845 

Depreciation and amortization (40,813) (42,413) 

Impairment of goodwill (note 7) – (26,575) 

Interest (note 10,12) (14,174) (21,152) 

Foreign currency exchange gain (loss) 1,171 (1,235) 

Income (loss) before patronage and income taxes 3,390 (88,530) 

Patronage allocation (note 16) (7,000) – 

Income tax recovery (note 11) 3,847 23,744 


CONSOLIDATED FINANCIAL STATEMENTS 5 



CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY 

As at 


December 25, 

2011 

December 26, 

2010 

Member Entitlements (note 16) 

Beginning of period $ 208,438 $ 214,386 

Patronage allocation 7,000 – 

Redemptions / Repayments (6,119) (6,287) 

Less than minimum and unclaimed 295 339 

209,614 208,438 

Retained Earnings 

Beginning of period 135,316 201,996 

Net earnings 237 (64,786) 

Dividends on investment shares (2,484) (1,894) 

133,069 135,316 

Cumulative Translation Adjustment 

Beginning of period (17,562) (14,684) 

Revaluation of non-Canadian accounts 138 (2,878) 

(17,424) (17,562) 

Total Members’ Equity $ 325,259 $ 326,192 


6 CONSOLIDATED FINANCIAL STATEMENTS 



CONSOLIDATED STATEMENT OF CASH FLOWS 



December 25, 

2011 

December 26, 

2010 

Operating activities 


Items not requiring an outlay of cash 


Gain on disposal of property and equipment (2,884) (244) 

Loss on disposal of application software – 31 

Write down of property and equipment – 603 

Asset retirement obligation accretion (note 13) 1,601 1,829 

Future income tax recovery (note 11) (8,009) (13,539) 

Decrease in other long-term liabilities (378) (1,768) 

Other amortization (1,410) (1,257) 

Depreciation and amortization (note 7,8) 40,813 42,413 

Impairment of goodwill (note 7) – 26,575 

36,970 (10,143) 

Asset retirement obligations settled (note 13) (1,562) (2,323) 

Changes in non-cash working capital related to operations (note 22) 15,477 2,470 

Cash provided by (used in) operating activities 50,885 (9,996) 

Investing activities 

Additions to property and equipment (10,507) (17,084) 

Proceeds from disposal of property held for resale 478 – 

Additions to goodwill and intangibles (2,843) (5,320) 

Proceeds from disposal of property and equipment 5,307 1,457 

Increase in other long-term assets – (320) 

Decrease in investments – 361 

Changes in non-cash working capital elements of investing activities – (2,692) 

Cash used in investing activities (7,565) (23,598) 

Financing activities 

Long-term debt (repaid) issued (note 12) (59,026) 46,206 

Member loans issued (note 10) 31,827 – 

Repayment of revolving equity (575) (576) 

Dividends on investment shares (2,484) (1,894) 

Redemption of shares (5,234) (5,373) 

Net repayment of member loans (6,575) (2,160) 

Cash (used in) provided by financing activities (42,067) 36,203 

Increase in cash 1,253 2,609 

Bank indebtedness, beginning of period (16) (2,625) 

Cash and cash equivalents (bank indebtedness), end of period $ 1,237 $ (16) 


CONSOLIDATED FINANCIAL STATEMENTS 7 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(Tabular amounts are stated in thousands of Canadian dollars except unit numbers) 

1. Nature of Operations 

United Farmers of Alberta Co-operative Limited (“UFA”) was incorporated by Special Act under the laws of Alberta 

and operates as three business segments distributing fuel products and construction services, farm supplies, and 

outdoor recreation products to its customers. As a co-operative, a significant portion of its business is with its 

member owners. The outdoor recreation products segment operates through two wholly owned subsidiaries which 

are Wholesale Sports Canada Ltd. (formerly 1406783 Alberta Ltd.) operating in western Canada and Wholesale 

Sports USA, Inc. (formerly UFA Holdings, Inc.) operating as Wholesale Sports in the northwest United States. UFA 

also has a 50% interest in UFA-LIT Joint Venture (“UFA-LIT”). 

2. Significant Accounting Policies 

Effective fiscal year 2011, the consolidated financial statements of UFA have been prepared in compliance with 

Canadian accounting standards for private enterprises (ASPE). Under the new standards, UFA has exercised 

certain elections available for transitioning companies. The financial impact of these changes is detailed in note 3. 

The comparative financial statements as at December 26, 2010 and the transition date of December 28, 2009 are 

on a basis consistent with the current year’s presentation. 

UFA prepares its consolidated financial statements on a retail calendar basis. The fiscal period end reflected in the 

consolidated financial statements is December 25, 2011 and the comparative period is December 26, 2010. 

Consolidation 

The consolidated financial statements include the accounts of UFA and its wholly owned subsidiaries, Wholesale 

Sports USA, Inc., Wholesale Sports Canada Ltd., and its 50% proportionate interest in its jointly controlled 

operations/assets of UFA-LIT Joint Venture. Transactions between UFA, its wholly owned subsidiaries and the 

proportionately consolidated entity are eliminated on consolidation. 

These consolidated financial statements are expressed in Canadian dollars. 

Revenue Recognition 

UFA recognizes revenue when products, goods and services are delivered to the customer or when the risks and 

rewards associated with ownership are transferred to the customer. Revenue related to building and intensive 

livestock construction projects is recognized using the percentage of completion basis. Under the percentage of 

completion method of accounting, the actual costs incurred and the budgeted costs to complete the project are 

used to measure progress on each contract. Revenue and cost estimates are revised periodically based on 

changes in circumstances. Revenue invoiced but not yet earned is recorded as deferred revenue. 

Cash and Cash Equivalents, and Bank Indebtedness 

Cash and cash equivalents and bank indebtedness consists of cash on account and bank indebtedness. 

8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 


Inventories 

Inventories are valued at the lower of cost and net realizable value, with cost being determined using the weighted 

average cost method. The cost of inventories includes the cost of purchase and other costs incurred in bringing the 

inventories to their present location and condition. Costs such as storage costs, and administrative overheads that 

do not contribute to bringing the inventories to their present location and condition, and selling costs are 

specifically excluded from the cost of inventories and are expensed in the period incurred. The amount of inventory 

recognized as an expense in the current period was $1,816.0 million (2010 – $1,483.7 million). 

Investments 

Investments are primarily held in other co-operative enterprises that are not publicly traded. For financial 

instrument purposes, these investments are measured at amortized cost. Provisions are made for impairments 

that are considered to be other than temporary. 

Property and Equipment 

Property and equipment are recorded at cost. Depreciation is recorded on a straight-line basis over the estimated 

useful lives of the assets at the rates indicated below commencing the month that the assets are placed into 

service. Capital leases which transfer significant ownership rights to UFA are recorded as property and equipment. 

Buildings, fences and yards 

15 to 25 years 

Equipment 

5 to 8 years 

Computer equipment and system software 

3 to 5 years 

Automotive equipment 

5 years 

Leased assets 

3 to 15 years 

Property and equipment classified as “In progress” is expected to be placed into productive use within 12 months 

and represents work commenced but not completed on major projects. Depreciation will commence once these 

assets are put into service. 

Property Held for Resale 

Property held for resale is recorded at the lower of cost or fair value less selling costs. 

Goodwill and Intangible Assets 

UFA records as goodwill the excess amount of the purchase price of entities acquired over the fair value of the 

identifiable net assets acquired, including intangible assets, at the date of acquisition. Goodwill is not amortized but 

is tested for impairment whenever events or changes in circumstances indicate that the carrying amount of the 

reporting unit to which the goodwill is assigned may exceed the fair value of the reporting unit. In the event of 

impairment, the excess of the carrying amount (including goodwill) of a reporting unit over its fair value would be 

charged to earnings. Intangible assets are amortized on a straight-line basis over the estimate useful life of the 

assets identified. 

Application software 

Trademarks/Trade names 

Lease/Licenses 

Non-competition agreements 

Customer relationships 

3 to 5 years 

10 years 

10 years 

4 years 

3 years 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9 


Income Taxes 

UFA follows the liability method of tax allocation in accounting for income taxes. Under this method, income taxes 

are recognized for the differences between financial statement carrying values and the respective income tax basis 

of assets and liabilities (temporary differences), and for the carry-forward of unused tax losses and income tax 

reductions. Future income tax assets and liabilities are measured using income tax rates expected to apply in the 

periods in which temporary differences are expected to be recovered or settled. The effect on future income tax 

assets and liabilities of a change in tax rates is included in income in the period that the change is substantively 

enacted. Future income tax assets are evaluated and recorded as required in the consolidated financial 

statements if realization is considered more likely than not. 

Asset Retirement Obligations 

UFA recognizes the current best estimate of the expenditure required to settle the asset retirement obligation for 

all long-lived assets in the period when the liability is incurred or the period when it can be reasonably estimated, 

whichever is earlier. The liability is adjusted due to revisions in the associated estimated timing and amount of 

costs. Estimates are determined using management’s best judgment supplemented by historical experience, 

market information and in some cases, a review of engineering data. UFA also recognizes a corresponding 

increase in the carrying cost of the asset. The carrying cost of the asset is depreciated on a straight-line basis, 

similar to the underlying assets for which the liability is recognized. 

Employee Future Benefits 

UFA operates a defined benefit pension plan for its regular employees along with an unfunded supplemental 

retirement plan for those employees affected by the Canada Revenue Agency maximum pension and contribution 

limits. The obligations of the plans are determined using the projected benefit method pro-rated on service and 

UFA’s best estimate of expected return on assets, salary growth and demographic changes. Experience gains and 

losses and changes in assumptions are amortized, using the corridor method, over the average remaining service 

period of the employee groups. Under the corridor method, amortization is recorded only if the accumulated net 

actuarial gains or losses exceed 10% of the greater of the accrued benefit obligation and the value of the plan 

assets. The market value of plan assets is used for all calculations. 

Foreign Currency Translation 

Wholesale Sports USA Inc. is considered to be a self-sustaining foreign operation. 

Assets and liabilities of self-sustaining foreign operations are translated into Canadian dollars at the rate of 

exchange in effect at the balance sheet date and revenues and expenses are translated at the average monthly 

rates of exchange during the period. Gains or losses on translation of self-sustaining foreign operations are 

included in cumulative translation adjustment in Members’ Equity. 

UFA translates foreign currency assets and liabilities into Canadian dollars at the period-end exchange rate for 

monetary items and at the historical exchange rate for non-monetary items. Foreign currency revenues and 

expenses are translated at the exchange rate in effect on the dates of the related transactions. Foreign currency 

gains and losses are included in income immediately. 

Financial Instruments 

Section 3856 Financial Instruments provides the disclosure and presentation requirements for privately owned 

organizations. It deals with the classification of financial instruments, from the perspective of the issuer, between 

liabilities and equity, the classification of related interest, dividends, losses and gains, and the circumstances in 

which financial assets and financial liabilities are offset. 

10 NOTES TO CONSOLODIATED FINANCIAL STATEMENTS 


Financial assets and financial liabilities will be recognized on the balance sheet when UFA becomes party to the 

contractual provisions of the financial instrument. UFA classifies financial assets and liabilities according to their 

characteristics and management’s choices and intentions related thereto for the purposes of ongoing 

measurement. 

All financial instruments are measured at fair value upon initial recognition. Subsequent measurement is at 

amortized cost, with the exception of cash and cash equivalents which are held at fair value. 

Use of Estimates 

The preparation of the consolidated financial statements in conformity with Canadian accounting standards for 

private enterprises requires management to make estimates and assumptions that affect the amounts reported in 

the consolidated financial statements and accompanying notes. These estimates are based on management’s 

best knowledge of current events and actions that UFA may undertake in the future. Management believes that the 

estimates are reasonable; however, actual results could differ from those estimates. Estimates are used when 

accounting for such items as inventory provisions, depreciation, pension obligation, income and other taxes, asset 

retirement obligations and testing goodwill and long-lived assets for impairment. Information presented and 

estimates used in the financial statements do not reflect anticipated resolutions to uncertainties by management. 



3. Impact of the Change in the Basis of Accounting 

The financial statements for the period ended December 25, 2011 are the first set of statements for which the 

entity has applied the Canadian accounting standards for private enterprises. Certain elections available to entities 

adopting ASPE were adopted, in accordance with the provisions set out in First-time Adoption, Section 1500 of 

Part II of the CICA Handbook. 

The impact of adopting these standards and the elections that were exercised were adjusted in retained earnings 

as at the transition date of December 28, 2009. 


Balance Sheet as at 

December 27, 2009 

based on previous 

financial statements 

Changes in 




based on ASPE 

Assets 

Current Assets 

Accounts receivable $ 143,739 $ – $ 143,739 

Inventories 258,023 – 258,023 

Prepaid expenses and deposits 6,002 – 6,002 

Future income taxes 232 – 232 

407,996 – 407,996 

Property held for resale 379 – 379 

Investments 1,223 – 1,223 

Other long-term assets 1,008 – 1,008 

Goodwill and intangible assets 101,143 – 101,143 

Property and equipment (note 3a) 263,711 19,334 283,045 

$ 775,460 $ 19,334 $ 794,794 

Liabilities and Members’ Equity 

Current Liabilities 

Bank indebtedness $ 2,625 $ – $ 2,625 

Accounts payable and accrued liabilities 148,934 – 148,934 

Deferred revenue 15,318 – 15,318 

Member loans 17,251 – 17,251 

Current portion of long-term debt 1,685 – 1,685 

185,813 – 185,813 

Long-term debt 151,650 – 151,650 

Asset retirement obligations 26,207 – 26,207 

Future income tax liability (note 3c) 1,300 922 2,222 

Long-term liabilities (note 3b) 21,222 5,982 27,204 

386,192 6,904 393,096 

Members’ Equity 

Member entitlements 214,386 – 214,386 

Retained earnings 189,566 12,430 201,996 

Cumulative translation adjustment (14,684) – (14,684) 

389,268 12,430 401,698 

$ 775,460 $ 19,334 $ 794,794 



(a) Fair Value of Property and Equipment 

UFA has elected the exemption in Section 1500, paragraph 12 and revalued certain parcels of its land to fair value 

as at the date of transition. 






Changes in 




based on ASPE 

Property and equipment at deemed cost 

Land $ 36,237 $ 19,334 $ 55,571 

Property and equipment at cost less accumulated depreciation 

Buildings, fences and yards $ 107,634 $ – $ 107,634 

Equipment 59,979 – 59,979 

Computer equipment and system software 14,529 – 14,529 

Automotive equipment 2,593 – 2,593 

Leased assets 35,681 – 35,681 

In progress 7,058 – 7,058 

$ 227,474 $ – $ 227,474 

$ 263,711 $ 19,334 $ 283,045 

(b) Unamortized Actuarial Losses for Employee Future Benefits 

UFA has elected the exemption in Section 1500, paragraph 14 and has recognized all cumulative actuarial losses 

in opening retained earnings at the date of transition. The company therefore revalued its accrued pension liability 

at the date of transition. 






Changes in 




based on ASPE 

Accrued benefit obligation, end of year $ 85,383 $ – $ 85,383 

Market value of plan assets, end of year 77,449 – 77,449 

Deficit of plan at end of year (7,934) – (7,934) 

Unamortized net actuarial loss 5,982 (5,982) – 

Accrued liability $ (1,952) $ (5,982) $ (7,934) 

(c) Future Income Tax Liability 

The ASPE elections relating to revaluation of land and recognition of unamortized actuarial losses resulted in a net 

future income tax liability of $ 0.922 million. 



4. Cash and Cash Equivalents (Bank Indebtedness) 

The components of cash and cash equivalents are: 

December 25, 

2011 

December 26, 

2010 

Cash and cash equivalents $ 1,237 $ – 

Bank indebtedness – 16 

Cash (Bank indebtedness) $ 1,237 $ (16) 

Rates paid on cash balances during the period January to December 2011 ranged from 0% to 1.0% (2010 – 0% to 

1.0%). As at December 26, 2010, the balance representing banking transactions in clearing were classified as 

bank indebtedness. 

5. Accounts Receivable 

Accounts receivable is comprised of customer and member receivables of $99.2 million (2010 – $91.1 million) 

extended under commercial terms, trade receivables and other miscellaneous receivables of $11.4 million (2010 – 

$27.0 million). The customer and member receivables are net of an allowance of $2.6 million (2010 – $3.0 million). 

During the period, UFA recorded $1.8 million in bad debts (2010 – $6.5 million). 

Other miscellaneous receivables consist of vendor rebates, income tax, Alberta Farm Fuel Benefits and other 

related receivables from the normal course of business. 

During 2009, UFA entered into an arrangement with the Bank of Nova Scotia (“BNS”) to transfer the rights to 

certain UFA’s trade receivables in exchange for cash. UFA will continue to service their customers for BNS. During 

the period the total funds received from BNS was $545.5 million (2010 – $475.9 million), and total funds returned 

to BNS on payments received from customers was $548.4 million (2010 – $445.1 million). The total balance of 

customer accounts outstanding with BNS as at December 25, 2011 was $66.9 million (2010 – $69.8 million) net of 

$9.9 million (2010 – $19.1 million) associated with funding received from BNS for which UFA has provided 

an indemnification. 

6. Property Held for Resale 

2011 2010 

Land $ 11,531 $ 11,821 

Buildings and equipment – 544 

Relocation properties 1,156 1,633 

$ 12,687 $ 13,998 

Less current portion – (833) 

Long-term portion $ 12,687 $ 13,165 

The balance of property held for resale represents assets which management have evaluated as not integral to 

business operations. The assets include purchases of employee homes to facilitate their relocation, with the 

intention of selling these properties as soon as possible. 



7. Goodwill and Intangible Assets 

Cost 

2011 

Accumulated 

Depreciation, 

Amortization Impairment Net Book Value 

Application software $ 57,453 $ 41,447 $ – $ 16,006 

Goodwill 35,245 – – 35,245 

Trademark/Trade names 9,276 3,132 – 6,144 

Leases/Licenses 7,994 2,803 – 5,191 

Non-competition agreements 3,113 2,790 – 323 

Customer relationships 100 100 – – 

$ 113,181 $ 50,272 $ – $ 62,909 

Cost 

2010 

Accumulated 

Depreciation, 

Amortization Impairment Net Book Value 

Application software $ 55,644 $ 34,804 $ – $ 20,840 

Goodwill 61,737 – 26,575 35,162 

Trademark/Trade names 9,276 2,237 – 7,039 

Leases/Licenses 7,994 2,001 – 5,993 

Non-competition agreements 3,113 2,325 – 788 

Customer relationships 100 100 – – 

$ 137,864 $ 41,467 $ 26,575 $ 69,822 

Goodwill balance in 2011 is after impairment write down from prior years. 

Goodwill includes amounts recognized at the time of the transaction and associated cumulative translation 

adjustment. 

Wholesale Sports USA, Inc. was tested for impairment at the end of the 2010 fiscal year and an impairment charge 

of $26.6 million to goodwill was recognized. Effective 2011 and onwards, goodwill will be tested for impairment 

whenever events or changes in circumstances indicate that the carrying amount of the reporting unit may exceed 

its fair value. 

8. Property and Equipment 

Cost 

2011 

Accumulated 

Depreciation, 

Amortization 

Net Book Value 

Land $ 46,636 $ – $ 46,636 

Buildings, fences and yards 152,995 67,347 85,648 

Equipment 131,474 89,267 42,207 

Computer equipment and system software 31,864 24,290 7,574 

Automotive equipment 18,171 16,798 1,373 

Leased assets 44,324 16,171 28,153 

In progress 9,739 – 9,739 

$ 435,203 $ 213,873 $ 221,330 



Cost 

2010 

Accumulated 

Depreciation, 

Amortization 


Land $ 46,782 $ – $ 46,782 

Buildings, fences and yards 155,516 59,810 95,706 

Equipment 129,149 79,312 49,837 

Computer equipment and system software 29,886 18,339 11,547 

Automotive equipment 17,710 16,014 1,696 

Leased assets 46,416 12,736 33,680 

In progress 7,299 – 7,299 

$ 432,758 $ 186,211 $ 246,547 

The balance of In progress at December 25, 2011 is expected to be placed into productive use during fiscal 2012 

and represents work commenced but not completed on buildings, equipment, computer equipment and software. 

Depreciation and amortization will commence once these assets are put into service. 

9. Deferred Revenue 

Deferred revenue includes deposits and prepayments on future sales and gift certificates sold. 

10. Member Loans 

UFA has two different voluntary member loan programs (the on demand “Member Loan” program and the “High 

Yield Member Investment Plan” program or “HYMIP”) both of which provide members, employees, and agents the 

opportunity to invest in UFA and earn a return on their investment. 

The on demand Member Loans are unsecured, and earn a rate of return on the investment at bank prime, as 

stated by the Royal Bank of Canada, plus 1% (prior to September 1, 2010 – bank prime less 0.5%). The balance 

of Member Loans as at December 25, 2011 was $8.5 million (2010 – $15.1 million), and the interest of $0.6 million 

(2010 – $0.5 million) was included in interest expense. 

UFA introduced the HYMIP program to members on June 15, 2011. The program is a 3 year investment that pays 

a fixed rate of 7% interest per year and matures on June 15, 2014. The plan has no early redemption options, and 

pays interest semi-annually on June 15th and December 15th of each year. The minimum investment allowed 

under the program was $5,000 and all HYMIP loans are unsecured. The program was fully subscribed and closed 

in November of 2011. 

The HYMIP balance as at December 25, 2011 was $31.8 million (2010 – $Nil), and the interest of $0.8 million 

(2010 – $Nil) was included in interest expense. 

The repayment of member loans is subject to the right of offset of any amounts owing to UFA, and is subject to 

UFA meeting the covenants contained under the Asset-Based Credit Agreement (see note 12). 



11. Income Taxes 

Income tax expense (recovery) differs from the amount that would be computed by applying the Canadian Federal 

and Provincial statutory income tax rates to earnings before income taxes as set out below: 

December 25, 

2011 

December 26, 

2010 

Income (loss) before patronage and income taxes $ 3,390 $ (88,530) 

Patronage allocation (7,000) – 

Net loss earnings before income taxes $ (3,610) $ (88,530) 

Statutory income tax rate 26.51% 28.02% 

Expected income tax recovery $ (957) $ (24,806) 

Non-deductible items and other (325) 475 

Rate adjustment including US rate impact (1,009) (2,637) 

True ups and other (1,556) 3,224 

Income tax expense $ (3,847) $ (23,744) 

Income taxes consists of: 

Current income tax expense (recovery) 4,162 (10,207) 

Future income tax recovery (8,009) (13,537) 

$ (3,847) $ (23,744) 

The net future income tax asset (liability) at the fiscal period end is comprised of the tax effect of the following 

temporary differences: 

December 25, 

2011 

December 26, 

2010 

Current future income tax asset (liability): 

Warranty and other $ 2,500 $ (116) 

Long-term future income tax asset (liability): 

Deferred compensation 2,268 877 

Asset retirement obligation 4,738 5,738 

Tax loss/Other 8,633 6,903 

Property and equipment and other 1,085 (2,187) 

$ 16,724 $ 11,331 

12. Long-Term Debt 

December 25, 

2011 

December 26, 

2010 

Asset-Based Credit Agreement – Revolving loans $ 93,946 $ 147,778 

Asset-Based Credit Agreement – Term loan 46,250 50,000 

Obligations under capital leases 1,804 3,130 

Deferred financing charges (1,038) (1,368) 

140,962 199,540 

Less: current portion (6,012) (6,418) 

$ 134,950 $ 193,122 



Asset-Based Credit Agreement 

UFA entered into an Asset-Based Credit Agreement (“Credit Agreement”) on December 13, 2010 that provides for 

an Asset-Based revolving credit facility in the maximum aggregate amount of $200.0 million and a fixed asset 

facility (Term loan) initially available on a one-draw only basis in the amount of $50.0 million. The Credit 

Agreement also has an accordion feature which permits UFA to request an increase in the revolving credit facility 

up to an additional amount of $50.0 million for a total availability of $250.0 million. Any increase under the 

accordion is not committed and must first be approved by the lenders. In 2011 UFA repaid $3.75M under the Term 

Loan facility as required, and did not request any increase in credit under the accordion feature of the revolving 

credit facility. 

Borrowing Base 

The amount available to be drawn under the Credit Agreement will vary from time to time based on UFA’s 

inventory and accounts receivable balances. The advances under the credit agreement cannot exceed the 

revolving loans borrowing base determined according to terms under the agreement that factors UFA’s inventory 

and receivables. In addition, reserves are calculated under the Agreement to take into account such factors as 

priority payables, and additional collateral requirement. 

At December 25, 2011, under the Credit Agreement the borrowing bases for accounts receivable and inventory 

were margined at $66.0 million (2010 – $52.8 million) and $139.0 million (2010 – $152.3 million) respectively. The 

total amount of reserves which were deducted from the borrowing bases was approximately $16.3 million (2010 – 

$15.2 million). At December 25, 2011, $80.2 million (2010 – $37.1 million) of credit was available to fund 

operations and working capital requirement. 

As at December 25, 2011, UFA’s balance in revolving loans under the Asset-Based Credit Agreement included 

$107.0 million (2010 – $161.0 million) drawn in Canadian dollars and $6.6 million (2010 – $1.2 million) advanced in 

US dollars. The Canadian dollar borrowings consisted of $100.0 million of 30 day Banker’s Acceptances and 

$7.0 million of Prime loans (2010 – $Nil), the US total was all Prime loans (2010 – $Nil) 

The total drawn by UFA under the Credit Agreement was offset by $17.6 million (2010 – $12.0 million) residing in 

bank balances held in deposit accounts. 

Term 

The Credit Agreement has a 3 year term ending December 13, 2013 including a clause for termination fees should 

the Credit Agreement be terminated within the two years of the date of closing. UFA can borrow under the 

agreement using Prime, Libor or Banker’s Acceptances and pricing is determined off a grid based on UFA Fixed 

Charge Coverage Ratio. During the term of the Asset-Based revolving credit facility, there are no fixed terms of 

repayment. The initial one-time advance of Term Loan for $50.0 million is repayable in equal quarterly installments 

based on a ten year amortization. As at December 25, 2011, UFA’s term loan balance was $46.3 million (2010 – 

$50.0 million) including the $5.0 million current portion scheduled for repayment over the next year. Banker’s 

Acceptances accounted for $30.0 million (2010 – $Nil) of the total outstanding balance, with the remainder in 

Prime loans. 

Security 

The Credit Agreement grants a security interest in all of UFA’s personal property and all of its real property is 

mortgaged in favour of the lenders under the agreement. 

Covenants 

UFA is subject to certain financial and collateral covenants related to the Asset-Based Credit Agreement. The 

Asset-Based Credit Agreement requires ongoing compliance with an Adjusted Fixed Charge Coverage Ratio as 

calculated on a 12-month rolling basis at the end of each month of not less than 1.1:1. UFA was in compliance with 

all financial covenants during the year and as at December 25, 2011. 



Capital Lease Obligations 

The assets under capital leases are the security for the respective obligations. Scheduled minimum lease 

payments for the next five periods total $2.0 million, including $0.2 million in financing expenses. The lease terms 

range from 1 to 5 periods at interest rates between 4.2% and 18.1% for 2011 (2010 – 4.2% and 17.9%). 

Principal Interest Total 

2012 $ 1,010 $ 84 $ 1,094 

2013 529 32 561 

2014 159 12 171 

2015 106 103 209 

2016 – – – 

$ 1,804 $ 231 $ 2,035 

13. Asset Retirement Obligations 

2011 2010 

Balance, beginning of year $ 22,171 $ 26,207 

Accretion expense 1,601 1,829 

Revisions in estimated cash flows (3,266) (3,542) 

Liabilities settled (1,562) (2,323) 

Balance, end of year $ 18,944 $ 22,171 

Estimated undiscounted future cash flows, adjusted for inflation, are $46.1 million (2010 – $48.5 million) and are 

expected to be incurred up to and including fiscal 2060. The present value or discounted fair value of the 

obligations was determined using a 7.7% discount rate and a 2.2% inflation rate (2010 – 7.7% and 2.2% 

respectively). The estimates used in determining UFA's asset retirement obligations could change due to changes 

in regulations and the timing, nature and extent of environmental remediation required. Changes in estimates are 

accounted for prospectively in the period that the estimate is revised. 

14. Long-Term Liabilities 

December 25, 

2011 

December 26, 

2010 

Accrued pension benefit liability (note 18) $ 7,494 $ 8,367 

Intangible lease liability 8,767 10,990 

Other long-term liabilities 5,277 4,311 

$ 21,538 $ 23,668 

The intangible lease liability represents the remaining unamortized fair value of lease commitments acquired in the 

acquisition of 15 Sportsman’s Warehouse stores. 



15. Commitments, Contingencies and Guarantees 

Future minimum payments under operating leases for certain facilities and equipment are due as listed: 

2012 $ 18,730 

2013 18,960 

2014 19,273 

2015 19,192 

2016 18,271 

After 2016 70,853 

$ 165,279 

UFA’s by-laws provide indemnification to its current and former directors, officers and employees to the extent 

permitted by law, against liabilities arising from their service to UFA. The broad nature of these indemnification bylaws 

does not permit a reasonable estimate of the maximum potential amount of any liability. No amount has been 

accrued in the consolidated financial statements in this respect. 

16. Member Entitlements 

Member entitlements consist of member shares, the current period’s patronage allocation, revolving equity and 

investment shares. All member entitlements for members that turn 65 years of age (“Senior Members”), is 

converted into Class A Investment shares, with the exception of one $5.00 member share. 

Details of member entitlements are as follows: 

2011 2010 

Member shares $ 29,017 $ 29,845 


Revolving equity 70,577 84,661 

Class A Investment shares 103,020 93,932 

Member entitlements, end of period $ 209,614 $ 208,438 

The repayment and redemption of equity and the payment of patronage and dividends are subject to the right of 

offset of any amounts owing to UFA, and are subject to UFA meeting the covenants contained under the Asset- 

Based Credit Agreement (see note 12). 

Member Shares 

UFA is authorized to issue an unlimited number of member shares with a par value of $5.00. Member shares are 

redeemable at the option of the holder at par value when the member reaches age 65, moves out of the trading 

area or, at the request of the member’s estate, upon the member’s death. 

2011 2010 

Ordinary shares issued: Number Amount Number Amount 

Balance, beginning of period 5,970 $ 29,845 6,146 $ 30,729 

Conversion to Class A Investment shares (119) (596) (132) (662) 

Redemption (46) (232) (44) (222) 

Balance, end of period 5,805 $ 29,017 5,970 $ 29,845 



Patronage Allocation 

UFA distributes a portion of its current fiscal period earnings to its members in the form of a patronage allocation. 

The allocation must be ratified by UFA’s elected delegates at their annual meeting held in March of the following 

period. As part of the ratification of the patronage allocation and as provided for under UFA’s by-laws, the 

delegates also approve the distribution of the current period allocation to member shares, non-interest bearing 

revolving equity, Class A Investment shares and the amount to be paid in cash. 

2011 2010 

Balance, beginning of period $ – $ – 

Current period allocation 7,000 – 

Balance, end of period $ 7,000 $ – 

Revolving Equity 

Revolving equity is non-interest bearing, non-redeemable by the member except in specific circumstances and is 

converted into Class A Investment shares on a straight-line basis over a 12 year period. 

2011 2010 

Balance, beginning of period $ 84,661 $ 99,587 

Conversion to Class A Investment shares (12,222) (12,644) 

Senior Members conversion to Class A Investment shares (1,288) (1,706) 

Repayment (574) (576) 

Balance, end of period $ 70,577 $ 84,661 

Class A Investment Shares 

Class A Investment shares are non-voting, have a par value of $100.00 and are redeemable at par value at the 

option of the holder subject to Board approval. The Board has the authority to restrict redemptions in any given 

year, even in situations where such redemptions are not unfavorable to UFA. 

Class A Investment shares are retractable at par value at the option of UFA and provide a dividend at bank prime 

rate less 0.5%. Dividends of $2.5 million (2010 – $1.9 million) on the investment shares are charged against 

retained earnings. The minimum required for a dividend cheque to be issued is $50 per member and the amount 

owing is held in investment shares until the minimum is met. 

2011 2010 

Investment shares issued: Number Amount Number Amount 

Balance, beginning of period $ 93,932 $ 84,070 

Conversion from revolving equity 122 12,209 126 12,644 

Senior Members conversion from revolving equity 13 1,288 17 1,706 

Senior Members conversion from member shares 6 596 7 662 

Redemption (53) (5,300) (55) (5,489) 

Less than minimum and unclaimed 295 339 

Balance, end of period $ 103,020 $ 93,932 



17. Financial Instruments 

UFA’s risk exposures and the impact on UFA’s financial instruments are summarized below: 

Credit Risk 

Credit risk is the risk of loss associated with a counter-party’s inability to fulfill its payment obligations. UFA is 

exposed to the credit risk on its accounts receivable from members and customers. The accounts receivable are 

net of applicable allowances for doubtful accounts, which are established based on the specific credit risks 

associated with individual members and customers and other relevant information. Concentration of credit risk with 

respect to receivables is limited, due to the large number of members and customers. 

Liquidity Risk 

UFA’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when 

they come due. At December 25, 2011, UFA had current assets of $362.5 million (2010 – $377.7 million) to settle 

current liabilities of $145.8 million (2010 – $155.6 million). All of UFA’s accounts payable, accrued liabilities and 

deferred revenue are subject to normal trade terms. (See notes 10 and 12 for information on payment terms of 

member loans and current and long-term debt.) 

Market Risk 

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign 

exchange rates, and commodity prices. These fluctuations may be significant. 

Interest Rate Risk 

UFA is exposed to interest rate risk under the Asset-Based Credit Agreement as the rate is based on its Fixed 

Charge Coverage Ratio. As of December 25, 2011, the interest rates paid on Canadian dollar advances and 

US dollar advances were Canadian Prime Rate or US Prime Rate plus 0.75% (2010 – Canadian or US Prime Rate 

plus 2.75%). For Banker’s Acceptances the interest rate was BA’s plus 2.25% (2010 – no Banker’s Acceptances 

existed). Further, the amortized transaction costs impacted the interest rate by 0.3% (2010 – 0.2%) making the 

effective interest rate to be 3.82%. A 1% change in the Prime Rate may have an annual before income taxes 

impact of approximately $2.0 million. UFA is not exposed to interest rate risk on capital lease obligations as the 

rates are fixed. 

Foreign Currency Risk 

UFA is exposed to foreign currency risk on exchange fluctuations related to its US dollar borrowings through the 

company’s Asset-Based Credit Agreement (see note 12) for funds advanced to its US-based subsidiary, 

Wholesale Sports USA, Inc., and short-term payables related to foreign suppliers. The foreign currency risk is 

considered minimal as these assets and liabilities are not of significant value, and all transactions are with trade 

vendors with typical payment terms. In 2011, UFA incurred a gain $1.2 million (2010 – loss of $1.2 million) due to 

changes in the value of the US-CDN exchange rate. 

UFA is also exposed to foreign currency risk in the operations of its US-based subsidiary, Wholesale Sports USA, 

Inc. However, since Wholesale Sports USA, Inc. is a self-sustaining subsidiary, revenues are generated in 

US dollars, which exceeds the natural hedge provided by the purchases of goods and services which are 

denominated in US dollars. US dollar exchange differences on the investment in Wholesale Sports USA, Inc. will 

be unrealized until the investment is disposed of. Exchange differences that occur during the period are recorded 

in the cumulative translation adjustment account in members’ equity. 



18. Employee Future Benefits 

UFA administers two defined benefit pension plans: a funded registered plan (“RPP”) for all employees and an 

unfunded supplemental retirement plan (“SERP”) for those employees whose earnings exceed the maximum 

allowable under government guidelines for the RPP. UFA funds the RPP in accordance with current pension 

legislation. UFA does not fund the SERP but has the obligation to pay SERP benefits out of general revenue in the 

period payments are made. Pension benefits are provided to qualified employees and are based, in general, on 

years of service and compensation near retirement. 

UFA measures its accrued benefit obligation and the fair value of plan assets of its pension plans for accounting 

purposes as at the end of each fiscal period. The most recent actuarial valuation of the RPP for funding purposes 

was as of December 31, 2010. 

Information regarding UFA’s defined benefit plans is as follows: 

December 25, 

2011 

December 26, 

2010 

Accrued benefit obligation, end of year $ 96,062 $ 96,685 

Market value of plan assets, end of year 84,200 86,768 

Deficit of plan at end of year (11,862) (9,917) 

Employer contributions subsequent to fiscal year end (496) (380) 

Unamortized net actuarial loss 4,864 1,930 

Accrued liability $ (7,494) $ (8,367) 

Included in the accrued benefit obligation is $3.1 million related to the SERP (2010 – $2.9 million). 

UFA’s accrued liability of $7.5 million differs from its funded status deficit of $11.9 million due to $4.9 million in 

unamortized net actuarial losses and $0.5 million in employer contributions that occurred subsequent to the fiscal 

year end date of December 25, 2011. Unamortized actuarial losses arise from differences between the expected 

and actual long-term rate of return on plan assets and from differences between actuary assumptions used to 

calculate UFA’s accrued benefit obligation and UFA’s actual experience. 



19. Joint Venture 

The consolidated statements include on a proportionate basis UFA’s interest in UFA-LIT Joint Venture. 

During 2010, UFA-LIT completed construction of a crop nutrition facility, a jointly controlled asset that began 

in 2009. 

A summary of the Company’s interest in the jointly controlled operation at December 25, 2011 is as follows before 

elimination of UFA’s contribution: 

Statement of Earnings 2011 2010 

Revenue $ 1,734 $ 1,159 

Cost of sales (1,650) (1,084) 

Operating and administrative expenses (112) (67) 

Depreciation and amortization (69) (44) 

Net earnings $ (97) $ (36) 

Balance Sheet 2011 2010 

Current assets $ 19 $ 51 

Property and equipment 758 823 

$ 777 $ 874 

Current liabilities $ 15 $ 16 

UFA’s contribution in equity 859 894 

Current earnings from Company’s interest in Joint Venture (97) (36) 

$ 777 $ 874 

The consolidated statements include UFA’s interest in this asset at $0.8 million (2010 – $0.8 million). UFA charges 

depreciation and amortization in accordance with its policy on Property, Plant & Equipment and Goodwill & 

Intangible Assets on its portion of interest held. 

Cost 

2011 

Accumulated 

Depreciation 


Property and Equipment 

Land $ 74 $ – $ 74 

Building 293 20 273 

Equipment 478 86 392 

Computer hardware 15 4 11 

$ 860 $ 110 $ 750 

Intangible Assets 

Application software $ 11 $ 3 $ 8 

$ 11 $ 3 $ 8 

20. Government Remittances 

Accounts payable and accrued liabilities as at December 25, 2011 include $7.9 million (2010 – $7.7 million) in 

respect of government remittances other than income taxes. Included in this total are federal and provincial sales 

and excise taxes, payroll related taxes, and environmental levies. 



21. Revenue Segmentation 

UFA derives a significant portion of its revenue by providing products and services to its members. The company’s 

business reflects three distinct categories of activity, including fuel products and construction, farm supplies, and 

outdoor recreation merchandise. 

Category Fiscal 2011 % Fiscal 2010 % 

Petroleum (including construction) $ 1,569,117 74.5 $ 1,202,501 69.0 

Agribusiness 327,709 15.5 338,445 19.4 

Outdoor recreation 211,624 10.0 201,995 11.6 

$ 2,108,450 $ 1,742,941 

22. Changes in non-cash working capital related to operations 

Non-cash working capital relating to operations generated cash flows of $15.5 million in fiscal year 2011 (2010 - 

$2.5 million). 

For the fifty-two weeks ended 

December 25, 

2011 

December 26, 

2010 

Accounts receivable $ 7,535 $ 25,575 

Inventory 11,513 18,171 

Prepaid expenses (999) (12,806) 

Accounts payable and accrued liabilities (2,885) (22,070) 

Deferred revenue and other 287 (4,513) 

Change related to cumulative translation adjustments 26 (1,887) 

$ 15,477 $ 2,470 

23. Interest and income taxes paid 

Interest paid in fiscal year 2011 is $12.8 million (2010 – $19.5 million). Income taxes recovered in fiscal year 2011 

was $11.2 million (2010 – $2.8 million). 



Board of Directors 2011 

Debbie Adolphson 

Tim Bancroft 

Bob Chisholm 

Bill Dobson 

Valleyview 

Calgary 

Calgary 

Paradise Valley 

Duane Glimsdale 

Jim Laverick 

Bill Lee 

Jacob Middelkamp 

Claresholm 

Chairman of the Board 

Calgary 

Camp Creek 

Gibbons 

Cornie Teichroeb 

Mic Thiessen 

Barry Webster 

La Crete 

Lethbridge 

Mountain View 


senior management 2011 

Bob Nelson 

Glenn Bingley 

Dave Irvine 

Sherry Ewert 

President & CEO 

Chief Operating Officer 

Wholesale Sports 

Vice President, 

Human Resources 

Director, 

Internal Audit 

Jimm Holland 

Rahul Kohli 

Peter Melnychuk 

Ed McCoy 

Managing Director, Brand Strategy 

& Integrated Marketing 

Chief Information Officer 

Executive Vice President & 

Chief Financial Officer 


Petroleum 

Bruce Nysetvold 

Ron Schinnour 

Jim Watt 

General Counsel 


AgriBusiness 

Chief Governance Officer 


Contact information

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