experience the value of cooperation - découvrir la...

value+ La Coop 2010

Experience the value of cooperation


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La Coop 2010

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OUR ORGANIZATION

CONTENTS

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La Coop fédérée contributes to the economic, social and environmental development of cooperative agricultural producers and its affiliated cooperatives by:

Developing an integrated cooperative network owned and operated by member agricultural producers to supply professional use products and services;

Operating a network of complementary businesses controlled by them that generate competitive earnings, primarily in the hardware, energy and meat processing sectors;

Enabling member produ-cers to join together in democratically coordinating the value added production chain they are part of;

Promoting cooperative education and bringing cooperative values to life.

4 President’sMessage 14 CooperativeOverview 20 ManagementDiscussionandAnalysis 36 OlymelOverview 42 ManagementReport 43 Auditors’Report 44 ConsolidatedBalanceSheet

45 ConsolidatedStatementofEarningsandReserve 45 ConsolidatedStatementofComprehensiveIncome 46 ConsolidatedStatementofCashFlows 47 NotestoConsolidatedFinancialStatements 67 FinancialReview 68 ListofLocations 69 AffiliatedCooperatives

Head OfficeLa Coop fédérée

9001 de l’Acadie BlvdSuite 200

Montréal, Québec H4N 3H7

Telephone: 514 384-6450

Fax: 514 858-2119

Websitewww.lacoop.coop

On peut obtenir la version française de ce rapport sur le site Internet de La Coop

fédérée à l’adresse www.lacoop.coop ou obtenir une copie imprimée

en communiquant avec le Service des communications au 514 384-6450.

Artistic Director/Graphic DesignerBernard Diamant

InfographiePierre Cadoret

Service de créationLa Coop fédérée

Photo Credits Martine Doyon, Photographer (www.martinedoyon.com) Valérie Laliberté, Assistant

Colour Separation and Printing Imprimerie Mont-Roy

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Value over time

A wheat with the desired characteristics! Finding it was a quest for Christian Azar at the crop research farm. He and the research team in Saint-Hyacinthe singled out Helios – a wheat cultivar with three highly attractive features. This variety comes to maturity earlier. It adapts equally to every zone in Québec – which is perfect for regions with a limited number of growing days… And it has excellent breadmaking quality. An innovation that improves the staff of life!

Employees + innovationsThe story of Helios

Annual Report 2010 - La Coop fédérée +1Annual Report 2010 - La Coop fédérée +1

Annual Report 2010 - La Coop fédérée+2

Value over time

An early heading cultivar, Helios is a

favourite with wheat growers because

it means field work can be finished

a few days earlier. And since it’s well

suited to growing conditions in

Québec, it can be farmed in

more regions.

Producers + benefitsThe story of Helios

Annual Report 2010 - La Coop fédérée +3

Value over time

Helios wheat also makes the grade when it

comes to processing – it is highly prized by the

milling industry. Its qualities make it top class for

loaf bread, with a absorbent flour. Not bad for a

sprout that matures so early! And we all know

that buying local is a growing trend. When you

buy locally, you support the local economy… and

that’s good for the environment. Grown and sold

locally, Helios wheat is ideal for everyone who

cares about where their food comes from.

Something to savour!

Consumers + LocalThe story of Helios

President’s Message


La Coop fédérée and La Coop’s network continue to evolve, staying

on course with their consolidation efforts and generating benefits

for their members.

Amidst global economic gloom, La Coop ended fiscal 2009-2010 with

satisfactory results, although lower than expected.

Canada was relatively unaffected by the global economic crisis but

given our dependence on international markets, the impact on La Coop’s

performance came as no surprise: sales totalled nearly $3.9 billion while

earnings before patronage refunds and income taxes amounted to over

$36 million, down from $53 million last year.

The decrease in earnings stemmed mainly from a lower contribution

from Olymel L.P., particularly in the Hog Sector.

The losses reported by the Hog Sector are due to higher supply

costs arising from the new pork industry marketing agreement and the

Canadian dollar’s sharp rise.

Results of the other sectors generally matched our expectations.

International Scene

On the international scene, 2010 was highlighted by the quest for a new

global economic order and the recognition of the role of countries such as

Brazil, Russia, India and China in the world’s new political and economic

landscape.

It is now a given that, from an economic perspective, the world

is now divided into three major zones. Europe and America are slowly

recovering from the last recession and global economic growth is now

primarily driven by the BRIC countries, namely Brazil, Russia, India and

China. At the WTO, the G20 meetings and the UN Security Council, the

interests of these countries are now an integral part of the current and

future political reality.

This new reality is the reason why the Doha round of WTO talks

has stagnated. With the majority of countries now seeking to negotiate

bilateral agreements, the protection of our supply management systems

cannot be taken for granted.

Technological innovation is key to our everyday lives as agricultural producers and

La Coop fédérée is committed to it with passion and determination. But behind

technology, lie the seeds that first sprouted in the fertile medium of human minds.

Inspired men and women, driven by the desire to make things better, have focused

their energy and spared no effort to track down a solution to suit their needs. Feeling

the winds of change – both political and economic – that are blowing through the

fields we work in, now, more than ever, is the time to work together toward a common

goal. Because, as ecologist Pierre Dansereau has suggested, our only failures are

failures of imagination. It’s up to us to reap the rich harvest of our ideas!

— Denis Richard


+ +

+

Ghislain Cloutier 1st Vice-president and Executive

Committee Member

Denis Richard President and

Executive Committee Member

Laurent Bousquet 2nd Vice-president and

Executive Committee Member

PRESIDENT’S MESSAGE


Marc A. TurcotteExecutive Committee

Member

+

This year, we will be closely monitoring the Canada-Europe free trade

talks as, unlike NAFTA, agriculture is not excluded from negotiations.

In international news, 2010 was also highlighted by what could be

called the war of currencies. With different countries intervening in cap-

ital markets or printing money on a large scale to fund their economic

stimulus packages, national monetary policies have been the focus of

intense debates in international forums.

Discussions are very likely to continue in the coming year and even

beyond. This is a key issue for Canada’s agriculture sector, whose vitality

depends more on exports than on the domestic market.

Although exchange rates and monetary policies of different central

banks have always affected competitiveness of agricultural exports, their

impact has heightened greatly since 2005 for three reasons.

First, central bank interest rates are a key factor in agricultural

producers’ cost of debt and national agriculture budgets, and higher

agricultural debt has amplified the impact of national monetary policies

on agricultural competitiveness.

Second, the liberalization of agricultural trade has led to a greater

role for exchange rates since the undervaluation of one currency against

another, at constant nominal rates, can discourage agricultural imports

and stimulate exports while reducing local consumers’ purchasing power

and their ability to buy imported agricultural products.

According to momagri (mouvement pour une organisation mondi-

ale de l’agriculture), the comparative advantage of US producers over

European producers, resulting from US monetary policy, amounted to

nearly $15 billion in 2009.

We can easily come to similar conclusions for Canada. We are well

placed to talk about the devastating impact of the Canadian dollar’s

strengthening against the US currency on our domestic and export mar-

kets, primarily in the hog sector.

For 2010 only, the US dollar’s undervaluation against our currency

represents an income shortfall of nearly $20 million for La Coop.

Third, capital markets are playing an increasing role in agricultural

trade. The volume of commodity futures has risen sharply since 2005,

and at the end of 2008, stood at five times more than the average for

contracts with other underlying items such as interest rates, equities or

precious metals.

With different commodities showing stronger correlation, agricul-

tural commodities, oil and financial assets have become interchangeable

substitutes for investors.

This greater role of capital markets has resulted in increased specula-

tion on agricultural commodities. Out of 20 trades in commodity markets,

only one involves actual delivery while the other 19 are purely financial.

This speculation is driving the higher volatility of agricultural com-

modity prices. Since April 2010, prices of corn, soya, cocoa, coffee and

sugar have fluctuated between 10% and over 25% within a period of only

a few weeks such that in July 2010, the FAO Food Price Index – which

tracks prices of the main agricultural products – was just 15% away from

its 2008 high. As we know, these high prices sparked food riots almost

everywhere in the world.

I am very pleased that grain prices are finally close to matching pro-

duction costs and like many others, I believe that stock exchanges can

be a useful tool for agricultural production. But, when markets become

Luc ForgetExecutive Committee

Member

+

Claude Couture

+


hostage to large speculative funds, agricultural producers are often

victims.

What we agricultural producers need is predictability and steady,

material recognition of the value of our work.

More than ever, agriculture should be a core component of a global

strategic vision integrating economic growth, environmental protection

and sustainable development.

However, the strategic aspect of agriculture is still overlooked in

international decision-making forums.

Such neglect has numerous possible reasons, but the main factors

are the separate mandates for agriculture and food in international

institutions and the widely-held belief that unregulated liberalization

of agriculture markets is beneficial.

Uncoordinated national agricultural policies around the world give

rise to dangerous imbalances, which have triggered and will inevitably

trigger significant tensions in the markets and in relations between dif-

ferent countries.

We must demand that the Canadian government do more than

simply make a vague commitment to defend supply management at

the WTO.

+

Normand MarcilCharles Proulx

Audit Commitee Member

+ +

Sophie Bédard

More than ever, agriculture should be a core component of a global strategic vision integrating economic growth, environmental protection and sustainable development.

The upcoming G20 summits are likely to focus on setting global

governance rules for better regulating financial sectors and economic

policies of different countries.

Canada should take a leadership role and lobby for the withdrawal

of agriculture issues at the WTO. Canada could also propose multilateral

negotiations aimed at setting common rules for regulating and sup-

porting national agriculture sectors, for combating excessive speculation

on agricultural commodities and for a unified global governance frame-

work for food security and agriculture.

Canada

On the national scene, with the Conservative government strengthening

its grip on power and the political centre of gravity shifting toward the

Western provinces, we can observe a greater polarization of the Canadian

duality between proponents of liberalized agricultural trade and the

defenders of supply management.

Nonetheless, it has now been clearly demonstrated that agricultural

commodity price volatility rises sharply with unregulated liberalization

of agricultural trade and that heightened speculation in futures markets

amplify this volatility, which is not beneficial for anyone.

PRESIDENT’S MESSAGE


Currently, several agriculture powerhouses are taking steps to curb

the volatility of agricultural commodity prices. France and Brazil have

come to an agreement on regulating their agriculture markets. China

recently announced its intention to introduce price controls to combat

speculation on food items while the US senate is contemplating various

measures to rein in speculation on agricultural commodities.

Against this background, the government of Canada should clearly

set out its position on how it intends to manage the issues of agricultural

trade liberalization and producer price stability. The government should

also be more transparent on what it intends to do to combat specula-

tion on agricultural commodities and counter the adverse fallout of the

Canadian dollar’s strength on our agriculture sector’s competitiveness.

Other than the federal government’s efforts to deal with unfavour-

able macroeconomic conditions, it is clear that the main sources of

agricultural support for our member producers are essentially provincial

authorities.

Despite the recent reforms to the Farm Income Stabilization

Insurance (FISI) program, we should be very pleased with the Québec

government’s commitment to support its agriculture sector to an extent

unmatched elsewhere in Canada.

That said, we must also pay close attention to the Québec govern-

ment’s agricultural policy review. Although the new policy has not yet

been announced at the time of writing, we believe that it will, at least in

part, adhere to the recommendations of the Pronovost report.

During the hearings of the Commission sur l’avenir de l’agriculture

et de l’agroalimentaire québécois (commission on the future of Québec’s

agriculture sector and agri-food industry), La Coop took a very clear stance

in favour of a multi-faceted agriculture sector that fully integrates sus-

tainability principles.

At the same time, we should not reject all the progress made by

Québec’s agriculture sector over the past 50 years and project a future

vision comprising only niche and local products.

Throughout the twentieth century, the cornerstone of our economic

thinking has been competition. Now, in the 21st century, coordination

between agri-food industry players seems to be the driving force.

+

Damien LemireAudit Commitee

Member

Françoise MongrainAudit Commitee

Member

+

Marc QuesnelAudit Commitee

Member

+

Around the world, agriculture sectors and agri-food industries are integrating to better meet the needs of

consumers, and large distribution networks and generate maximum synergy and efficiency.

Accordingly, the Québec government’s agricultural policy should also include the aim of creating favourable

conditions for local businesses which are part of this new trend and are competing vigorously in national and

international markets to sell our products.


Around the world, agriculture sectors and agri-food industries are

integrating to better meet the needs of consumers, and large distribution

networks and generate maximum synergy and efficiency.

Accordingly, the Québec government’s agricultural policy should also

include the aim of creating favourable conditions for local businesses

which are part of this new trend and are competing vigorously in national

and international markets to sell our products.

The recent implementation of a new pork marketing agreement in

Québec is undeniable proof that collective marketing efforts is compat-

ible with emerging trends such as coordination between producers and

processors.

This umbrella legislation should also recognize and strengthen the

structure provided by the agricultural cooperative network in marketing

farm products and propose specific governmental support measures in

this respect.

Last, we also hope that, when reviewing its agriculture policy, the

Québec government would study the mechanisms in neighbouring

Ontario and United States and seek to lighten the administrative and

technical burden imposed on agricultural producers under various gov-

ernment programs.

Cooperative Network

On the cooperative scene, we mainly focused our efforts on trans-

forming La Coop’s network and on the Chrysalide project. We all know

that, even with the best of national support policies, pressures on the

agriculture sector can only intensify.

It is up to us to give ourselves the tools we need and change the way

we work to meet the challenges and issues we face.

As you know, the Chrysalide project’s primary aim is to pool the

production assets and resources of cooperatives operating in the animal

production sector. The objective is to generate recurring efficiency gains

totalling approximately $30 million per year and help decrease farm pro-

duction costs.

In recent years, we have seen cooperatives in the United States and

in France seeking to achieve a critical mass and realize economies of scale

by absorbing or merging with neighbouring cooperatives while making

some efforts to maintain their associative nature.

With the Chrysalide project, we have opted for a different path.

We are relying first and foremost on our associative nature, on the local

and regional dynamism of cooperative organizations, by promoting

inter-cooperation.

We can now talk authentically of network strength since the

Chrysalide project is about a different way of working in a network with

coordination taking place all along a product’s value chain. Chrysalide

is about comprehensive efforts to cut farm production costs and has

already spawned projects in the Animal Production Sector. The current

year should see the rollout of the Chrysalide project in the Sonic Petroleum

Sector as well as the start of preliminary planning for a Chrysalide project

in the Crop Production Sector.

Over the past year, I have heard some say that the implementation

of this new approach seemed long and arduous. I can assure you that our

managers have worked hard to put our guidelines into practice.

Designing a new business model is no easy task. However, concrete

results are already available with estimated savings of nearly $9.6 million

+

Conrad Robitaille Serge Boivin

+

MESSAGE DU PRÉSIDENTPRESIDENT’S MESSAGE


generated to date by network cooperatives following the partial imple-

mentation of Chrysalide principles.

The final rollout should start during fiscal 2011 once all the participat-

ing cooperatives have signed franchising agreements.

This second rollout phase should generate additional recurring annual

gains of $12.6 million and the total gains of $30.5 million targeted by the

Chrysalide project for the Animal Production Sector should be achieved

by the end of the next fiscal year.

To date, the Chrysalide project in the Animal Production Sector is on

schedule and has stayed on budget. By the end of the project, La Coop

and network cooperatives will have invested more than $30 million in the

modernization of their animal production operations.

To generate the expected gains by this project and those to come,

certain efforts must be made. Cooperatives must first accelerate the

process for ratifying the new franchising agreements in animal produc-

tion, which is the starting point for final Chrysalide rollout.

All the consolidation actions must also be carried out. I’m referring

here to potential savings resulting from the rationalization of transporta-

tion operations and administrative procedures, the development of which

is behind schedule.

Last, it is essential to complete network computerization by work-

ing out the final details for Fidelio implementation. Pooling network IT

resources and centralized hosting via Fidelio are the only options for stan-

dardizing processes and sharing information throughout the network.

The other major project we focused on this year is in the Hog Sector.

Many reasons have been put forward to explain the near five year-long

crisis in the sector but finding workable solutions is proving to be more

difficult.

Fortunately, La Coop’s network started focusing on this issue since

the early days of the crisis, first with the introduction of La Coop pork,

leading to the signing of a new collective marketing agreement, which

fosters a user-owner relationship with our producers. As a result, we are

better positioned to provide greater value for their production.

This sector approach, which is the standard elsewhere in the world,

allows us to work to meet the needs of the most lucrative markets, namely

traceability as well as pork with specific colour, tenderness and fat content.

By using a sector approach, we can work on all the factors that impact

the qualities sought after by consumers. All pork-related factors such as

genetics, regulations, feed, transportation and processing are now under

our control and can be used to add maximum value to our products and

ensure positive fallout for all sector players.

What is required now is to give a political voice to the sector’s pork

producers and attract independent producers less familiar with how

cooperatives work in order to achieve a critical mass necessary to main-

tain efficient operations and maximize synergies and positive fallout

within the sector.

The challenge is daunting but the agricultural cooperative move-

ment has faced many such challenges. In Québec, we have undeniable

advantages, namely our assets and our people’s know-how in production,

processing and marketing.

I have strong hopes that the Chrysalide project, Olymel and La Coop’s

Hog Sector will soon return to profitability, ensuring the long-term survival

of hog production in Québec.

Before concluding, I would like to express my pride and joy at the

success achieved by our Fonds coopératif d’aide à la relève agricole. The

fund is currently starting its third year of operations and to date, over

260 young agricultural producers have benefited from special reductions

granted from a $3.6 million budget allocated by La Coop’s network.

As you know, the fund’s main objectives were to promote cooperation

and help develop our youth’s skills while making a financial contribution

to the new generation of agricultural producers.

Clearly, these objectives have been achieved to the satisfaction of

all, and over the next year, La Coop’s Board of Directors will assess the

possibility of renewing this program for another three years.

To conclude, I would like to thank my colleagues on the Board of

Directors for their commitment, dedication, drive and openness to change.

I would also like to thank Réjean Nadeau and his team for generating

gratifying results under difficult economic conditions.

I also extend warm thanks to our Chief Executive Officer Claude

Lafleur and his team, and to all managers of La Coop’s network who helped

in small or large ways to develop the Chrysalide project rollout plan.

Your commitment to the transformation of the network in the

best interests of all members is highly appreciated. We are pleased we

can count on your skills and professionalism to ensure success for the

Chrysalide project in the coming years.

Finally, I would like to thank you, the leaders of our affiliated coopera-

tives, for your commitment, openness and solidarity. La Coop’s success is

closely tied to that of our affiliated cooperatives, and their support and

determination to constantly adapt to their members’ needs give us great

confidence in our future.

I remain convinced that, for self-employed producers, the future

lies in membership in a world-class network with the resources to sup-

port their day-to-day operations and contribute to the success of their

agricultural businesses.

Denis Richard

President


Value as far as Asia

Nadège Hervé of the Research and Development

Activities Department knows too well the problems

caused by foot rot. Affecting chickens’ feet, this

bacterial infection is primarily due to wet litter.

La Coop’s solution – food specifically designed to

improve the state of litter! No more wet litter…

and no more foot rot!

Employees + innovationFeet that make tracks



Healthy chickens mean bigger profits. It’s

obvious – healthy chickens mean smaller losses,

lower processing costs, and higher productivity.

What’s more, healthy chicken feet have good sales

potential, especially in Asian markets. For our

producers, that means new sources of income.

Producers + performanceFeet that make tracks



We’re all concerned about the well-being of

animals, even those we raise for food. And we feel

that poultry raised in healthy conditions is so much

more appetizing. Eliminating foot rot is excellent

news for local consumers. And it also opens

opportunities for new markets – we can satisfy

demand from Asian consumers, who find chicken

feet are a delicacy!

Consumers + marketsFeet that make tracks


Cooperative Overview

The cooperative model is a

breeding ground for social

innovations and continues

to be based on the same

principles set out in the

Statement of Cooperative

Identity adopted by

the International

Cooperative Alliance.

Cooperation has been enriching the theme of market economy since

1844. In the wake of the Rochdale Equitable Pioneers Society, which

set down the basic principles, the cooperative business model has con-

tinued to flourish, offering consumers throughout the world a solution

to the excesses of capitalism.

The cooperative model is a breeding ground for social innovations

and continues to be based on the same principles set out in the Statement

of Cooperative Identity adopted by the International Cooperative Alliance.

La Coop fédérée fully adheres to this Statement and strives to inte-

grate these principles in the administration and day-to-day management

of its affairs.

Free and open membership

During the year, La Coop added two new members while four coopera-

tives were combined through two mergers. At year-end, 106 member

cooperatives were willing partners of the extensive La Coop network,

bringing together some 62,000 regular members and 33,000 auxiliary

or associate members, for a total of nearly 95,000 members.

Democratic member control

As at October 31, 2010, 595 members elected by their peers managed

106 La Coop-affiliated cooperatives entitled to appoint 329 delegates

to represent them at meetings. Of this number, 298 delegates and

38 alternates attended La Coop’s Annual General Meeting in February

2010, resulting in a participation rate of more than 90%.

Other meetings throughout the year provided cooperative execu-

tives with opportunities to enter into open dialogue and guide La Coop’s

actions. A total of 302 presidents, vice-presidents and general managers

participated in the President’s Tour in January 2010, while 61 coopera-

tive presidents took part in the Presidents’ Forum in April 2010 and

137 cooperative executives attended the semi-annual meeting in August

2010. La Coop also ensures close relationships with its members by set-

ting up various committees and inviting representatives of affiliated

cooperatives to serve on them.

The Board, which is made up of 15 elected directors from the

15 regional and provincial areas, devoted 25 working days to La Coop’s

commercial and cooperative affairs (excluding Olymel L.P.’s operations).

Last, the Executive Committee spent an additional 12 days reviewing

various matters.

Member economic participation

The member cooperatives hold $104.1 million worth of La Coop’s common

shares and $320.5 million in the form of a collective reserve. This reserve

is used to ensure La Coop’s future development and to support various

undertakings related to the needs of affiliated cooperatives.

In 2010, La Coop also distributed patronage refunds to its members

for a total amount of $11.5 million, bringing total patronage refunds to

cooperatives to $66.5 million for the past five years.


Other meetings throughout the year provided cooperative

executives with opportunities to enter into open dialogue

and guide La Coop’s actions.

Last, La Coop resolved to repurchase from its members Class

D common shares issued in 2005 and Class B common shares issued

between 1995 and 1997 for a cash consideration of $6 million.

Autonomy and independence

La Coop ensures its independence from lenders by maintaining conserva-

tive financial ratios. It also strives to retain at least an equal interest when

entering into alliances with other enterprises.

La Coop promotes sound governance practices, most notably by

separating the positions of president and general manager, by fostering

directors’ independence from management and by pursuing sustainable

results.

In addition, La Coop recognizes the autonomy and independence of

its member cooperatives. La Coop has implemented various initiatives to

meet the needs of a minimum number of its member cooperatives, while

making program participation optional for each cooperative.

Education, training and information

La Coop communicates with all members of affiliated agricultural

cooperatives via its magazine, Le Coopérateur agricole, its main edu-

cational and informational tool published nine times a year. Moreover,

with its online news brief, La Coop en ligne, La Coop can communicate

rapidly and frequently with all its employees and network leaders; 46

issues were sent out last year.

To promote information exchange, La Coop has also made several

intranet sites available to different internal professional groups. As a

result, presidents, general managers and anyone interested in cooperative

affairs can have access to a dedicated site.

La Coop also provides training for all elected representatives to sup-

port their role within the agricultural cooperative network. Currently,

380 elected representatives are taking part in this program. Of that

number, 72 have earned formal designations as members after accumu-

lating 15 training credits; 56 are companions (30 credits) and 95 are

commanders (45 credits or more). Employees have access to 71 training

courses tailored to their needs offered by Académie La Coop. Excluding

Olymel, La Coop invested $6.7 million in training over the fiscal year,

representing more than 2% of the payroll.

Moreover, La Coop pursues its education and training objectives

among a number of target groups, including young and/or female agri-

cultural producers, by organizing annual seminars and forums. It offers

scholarships to students and provides financial support to various educa-

tional institutions. Efforts are also made to educate opinion leaders and

the general public on the relevance of the cooperative agricultural model.

Cooperation among cooperatives

La Coop’s involvement in a variety of organizations and associations

enhances its member services and strengthens the cooperative move-

ment. These groups include the Conseil québécois de la coopération

et de la mutualité, the Conseil Canadien de la coopération et de la


mutualité, the Fondation québécoise pour l’éducation à la coopéra-

tion et à la mutualité, la Société de coopération pour le développement

international (SOCODEVI), the Chair in management and governance of

cooperatives and mutual organizations of the Institut de recherche sur

les coopératives et les mutuelles de l’Université de Sherbrooke (IRECUS)

as well as Co-operators Life Insurance Company, Cooperative Research

Farms, Gene +, Interprovincial Co-operative and Independent Lumber

Dealers Co-operative.

Through personnel secondments, La Coop also participated in sev-

eral missions to help overseas cooperatives supported by SOCODEVI and

promoted the Association des éducateurs coopératifs by bearing the costs

of translating its newsletter into French.

Within its own network, La Coop strives to foster collaborative efforts

between cooperatives to maximize the benefits of intercooperation.

During the year, La Coop continued its supporting role in numerous opti-

mization and resource pooling projects under the Chrysalide umbrella. La

Coop advocates a global vision of the network that promotes maintaining

the largest possible number of cooperatives with a front office while

operating as an organization with a highly integrated back office.

Concern for the community

Over the year, La Coop (including Olymel) spent a total of $755,500 on

donations and sponsorships to assist worthy organizations and events.

Sports, promoting the agricultural profession and alleviating poverty

were the main causes supported by La Coop while Olymel focused on

alleviating poverty and promoting health.

In addition to the donations and sponsorships, more than $200,000

were paid during the year to the recipients of the Fonds coopératif d’aide à

la relève, a fund set up by La Coop to support young agricultural producers.

Seventy-eight young agricultural producers met the required conditions

during the year, bringing the total number of recipients to 189. La Coop

aims to train and ensure a solid new generation of agricultural producers

for La Coop’s extensive network.

Concern for the community was also demonstrated by different

initiatives to ensure sustainable development of the local surroundings

of La Coop network’s cooperatives. La Coop provided leadership in this

respect by supporting a pilot project launched during the year in two

affiliated cooperatives. This integrated sustainable development project

will eventually be graded by an external firm. The know-how gained will

then be transferred to other cooperatives in La Coop’s network that wish

to work towards sustainability.

La Coop aims to train and ensure a solid new generation of

agricultural producers for La Coop’s extensive network.

coopEratiVE OVERVIEW


Value for the future

What do you do with soiled poultry litter? Turn it into energy. That’s what Cyrille Néron and Josée Chicoine are doing in partnership with France’s CoopAgri Bretagne, which has manufactured a litter-burning stove. And the results are very promising. The stove is to meet the ministère du Développement durable, de l’Environnement et des Parcs’ standards for burning agricultural biomass. This innovation could also pave the way for using other types of agricultural residues as fuel. What’s next? A prototype is slated for testing in one of our breeding facilities in 2011-2012 to obtain the required certificates from the Ministère. An alternative solution to spreading litter… at last?

Employees + innovationLitter power



Using poultry litter as fuel – that’s a hot thought! It would allow producers to

heat their hen house without fossil fuels… which means, at no cost. Using a

by-product of breeding will certainly bring down the costs of producing

chickens and turkeys – and what producer could complain about savings?

Just one more innovation that directly impacts the bottom line!

Producers + profitabilityLitter power



And with this innovation, the countryside will

retain its pristine appeal. Because burning

poultry manure produces no odour. By reducing

our dependence on fossil fuels, the litter-burning

stove will also help cut climate-changing

greenhouse gas emissions.

Consumers + perceptionsLitter power

Management Discussion and Analysis


[in thousands of dollars] 2010 2009

Revenues $ 3,947,871 $ 3,919,963

Operating earnings 35,418 64,967

Earning before patronage refunds and income taxes 36,077 53,346

Patronage refunds 11,500 15,000

Net earnings 18,723 27,600

Accounts receivable and inventories 661,741 613,679

Current assets 688,264 627,592

Working capital 92,898 191,178

Property, plant and equipment, at cost 1,100,960 1,061,485

Property, plant and equipment, net carrying amount 454,586 459,860

Total assets 1,291,237 1,221,516

Long-term debt, including current portion 212,004 191,792

Preferred shares and equity 440,518 412,482

Number of employees 10,429 11,336

Highpoints of innovation shine through the

years. Copernicus, Da Vinci, Darwin… to name

but a few of the great minds that have driven

progress, all had to face the uproar their ideas

caused. But out of tumult often come unity and

strength. Of course, doing things as we have never

done them – changing old habits – presents an

element of risk. But, doing nothing holds just as

much… if not more! There is an urge to take action,

to invent and create new forms of collective wealth

that benefit everyone.

— Claude Lafleur


+

+ +

Paul NoiseuxChief Financial Officer

Claude LafleurChief Executive Officer

Gaétan DesrochesChief Operating Officer


Management discussion and analysis

Working capital[in thousands of dollars]

2010 $ 92,898

2009 $ 191,178

2008 $ 181,421

2007 $ 43,846

2006 $ 164,721

Revenues[in thousands of dollars]

2010 $ 3,947,871

2009 $ 3,919,963

2008 $ 3,606,101

2007 $ 3,286,795

2006 $ 3,175,705

Earnings (losses) before patronage refunds and income taxes[in thousands of dollars]

2010 $ 36,077

2009 $ 53,346

2008 $ 70,992

2007 $ 40,587

2006 $ ( 21,599 )

Preferred shares and equity[in thousands of dollars]

2010 $ 440,518

2009 $ 412,482

2008 $ 383,528

2007 $ 338,754

2006 $ 305,890

Patronage refunds [in thousands of dollars]

2010 $ 11,500

2009 $ 15,000

2008 $ 30,000

2007 $ 10,000

2006 $ —

Underlying this relatively modest performance

are three positive pieces of information:

the results are in line with our budget,

demonstrating that the business is well under

control; they were fuelled by operations that

ended on a strong note in the last quarter;

all investments and expenses relating to our

numerous transformation projects have

been factored in.


Québec’s agri-food industry is adapting to new conditions, namely

high price volatility, fierce competition across all markets, less gen-

erous government support and greater financial fragility of farms, and

is transforming itself at an unprecedented pace. La Coop fédérée, its

subsidiaries and its extensive network of cooperatives are very much

part of this process.

Guided by its strong values, well supported by its cooperatives,

members and financial partners, and sheltered from the dictates of stock

markets, La Coop continues – boldly and steadfastly – to optimize its

extensive resources, innovate in production processes and modernize

all its infrastructures and systems. That’s no easy task.

Despite these major upheavals and an unprecedented crisis in the

hog industry that absorbed a considerable portion of its profits, La Coop

still generated earnings of $36.1 million, although down $17.2 million

from the previous year.

Underlying this relatively modest performance are three positive

pieces of information: the results are in line with our budget, demon-

strating that the business is well under control; they were fuelled by

operations that ended on a strong note in the last quarter; all investments

and expenses relating to our numerous transformation projects have

been factored in. The first three months of the current fiscal year that

started on October 31, 2010 are already showing highly encouraging signs.

Sophie RobillardChief, Business Strategies

and Development

Alain GarneauHead Legal Counsel

and Chief, Legal Affairs

Mario LeclercChief, Human Resources

Gilles DenetteChief, Member Services,

Innovation and Sustainable Development

+

+ +

+



That said, a significant decline in earnings at Olymel L.P. impacted

the earnings figure of $36.1 million. Olymel – which is responsible for

two major sectors, namely pork processing and poultry processing –

reported negative operating income in its Québec Hog Sector. This weak

performance results from higher supply costs combined with the rise in

the Canadian dollar. However, despite difficulties in the turkey market,

the Poultry Sector surpassed last year’s performance substantially, due

to a very favourable balance between supply and demand conditions.

Supply Operations, which include five major sectors, namely Animal

Production, Crop Production, Grain and Feedmill Supply, Hardware and

Farm Machinery, and Petroleum, posted net earnings slightly below

2009 results. All sectors, barring Crop Production, reported marginally

weaker results. In addition, the results of Agronomy Company of Canada

(Agronomy) – a large subsidiary acquired in 2008 – declined as a result

of accounting rules that had favoured the 2009 results with the reversal

of inventory impairment provisions.

Consolidated revenues totalled $3.95 billion for the year ended

October 30, 2010, up from $3.92 billion for fiscal 2009.

The increase is attributable to sales at our subsidiary Olymel L.P.,

which rose $69.0 million compared with the previous fiscal year, mainly

as a result of higher volumes in the Western Fresh Pork Sector combined

with higher market prices for fresh pork. However, the additional 53rd

week in fiscal 2009 explains the $48.0 million decline in sales. Sales at

Supply Operations were down $40.0 million, due primarily to lower input

prices across nearly all sectors, except for Petroleum, and Hardware and

Farm Machinery, combined with the additional 53rd week in fiscal 2009.

But fertilizer volumes were back up to more normal levels. The Grain and

Feedmill Supply Sector and particularly Elite Grain, reported record mar-

keting volumes while Feedmill Supply sales volumes were up following

stronger loyalty from La Coop’s network. More than one million tonnes

were marketed this year.

Cost of sales and selling and administrative expenses rose to

$3.90 billion from $3.84 billion for the previous year, primarily on higher

input costs, particularly in the fresh pork sector.

Financial expenses totalled $10.1 million for fiscal 2010 compared

with $14.7 million for 2009. Fiscal 2009 financial expenses included an

amount of $1.9 million in interest paid as part of the settlement to acquire

shares of an agrocentre. Excluding this amount, the decline in financial

expenses results partly from lower bank borrowings combined with the

fall in interest rates and partly from higher interest income recorded

by Agronomy.

La Coop fédérée reported $35.4 million in operating earnings, down

from $65.0 million in 2009, following unfavourable market conditions in

the hog sector.

The share of results of entities subject to significant influence

amounted to $2.9 million compared with $5.3 million for the previous

year. The agrocentres, in which we are partners, successfully regained

the market share lost in 2009 which hurt our results.

Gains (losses) on disposal of assets totalling $650,000 relate mainly to

gains on sales of property, plant and equipment while the loss of $2.3 mil-

lion reported in 2009 arose from a settlement related to the acquisition

of shares of an agrocentre.

Earnings before patronage refunds and income taxes, net of the

non-controlling interest, totalled $36.1 million, down from $53.3 million

in 2009.

For the year ended October 30, 2010, after factoring in $11.5 million

in declared patronage refunds and $5.9 million in income taxes, La Coop

posted $18.7 million in net earnings, down from $27.6 million in 2009.

Segmented Information(Segmented revenues include amounts related to intersegment transactions.)

Supply OperationsSales and revenues, after eliminating internal transactions, totalled $1.80

billion, down 2.2% or $40.0 million from $1.84 billion for the previous year.

The additional 53rd week in fiscal 2009 and lower input costs for several

sectors are the main underlying factors for the decrease in operating

sales, which was partly offset by higher prices for petroleum products.

On a more encouraging note, we highlight the strong recovery in

fertilizer sales, which are now back at historical levels after declining for

only one year. Marketing volumes reached a record high at Elite Grain as

well as for Feedmill Supply, which benefited from stronger loyalty from

La Coop’s network.


Earnings before taxes at Supply Operations fell 6.5% to $47.7 million;

2009 performance was bolstered by favourable marketing conditions

outside Québec.

The Animal Production Sector reported sales of $210.7 million for the

year, down $29.8 million from $240.5 million for fiscal 2009. This decrease

stems from lower prices for animal feed ingredients. Dairy animal feed

volumes shrank 3.5% despite a net gain in market share, as high feed

quality led to a reduction in feed rations for Québec dairy livestock.

Hog feed sales volumes were down by just 1.1% over the year, caused

mainly by the farm milling market. Generating profits remains a challenge

for Québec hog farms and this was certainly a primary concern for the

Animal Production Sector. A special task force was set up to create new

approaches to help the hog farming sector return to profitability and

is still continuing its work. In this respect, network producers gener-

ated additional revenues by producing 1.2 million La Coop certified hogs

this year.

Poultry feed volumes contracted 1.5% following the discontinuation

of a portion of poultry production earmarked for export.

Fertilizer sales in the Crop Production Sector totalled $113.0 million

in 2010, down $23.0 million from $136.0 million in 2009. The decrease was

due to lower raw material prices, which resulted in the average selling

price to clients falling below the 2009 average price by $215 per metric

tonne. The 28.7% surge in sales volume could not offset the decrease

in prices, leading to a 17.2% decline in revenues. Industrial sales were

particularly important due to the recovery of the fertilizer market, which

grew 17.4% in Québec. La Coop fédérée capitalized on this growth by

expanding its market share.

Net seed sales fell 8.0% to $36.8 million with the area of Québec land

sown with corn shrinking by a little over 8.0% compared with last year.

Crop protection sales diminished by $7.4 million, mainly due to lower

prices, including a near 55.0% plunge for glyphosate molecules. Fiscal 2010

was unfavourable for fungicides as demand was lower for these products.

Last, consolidated sales at Agronomy totalled $286.3 million, down

5.9% from 2009, stemming mainly from lower fertilizer prices.

The Grain and Feedmill Supply Sector reported net sales of $300.4 mil-

lion compared with $323.8 million in 2009. Grain marketing operations

generated net sales of $162.8 million, down 15.2% or $29.0 million

from the previous year. While corn production was slightly lower, the

decline in net sales is mainly explained by the 11.3% fall in the average

price. Feedmill supply operations reported a 24.5% surge in net sales to

$43.3 million, resulting from stronger loyalty from La Coop’s network.

Net sales at Elite Grain contracted 2.9% to $94.3 million, due to a fall in

the average price of $68 per tonne.

In the Hardware and Farm Machinery Sector, hardware and materials

generated sales of $225.3 million, up 1.4% or $3.1 million. A significant

portion of this increase results from material sales, which were bolstered

by better competitiveness and the creation of a flyer for renovation cen-

tres. Materials’ better performance was offset by lower hardware sales

resulting from the very mild winter. In 2010, the investment support policy

contributed to the Unimat network’s development with over $1.6 million

invested in 43 projects. Sales of machinery and spare parts fell 12.9%

and 16.0%, respectively, with total net sales for the sector amounting

to $15.2 million, down 14.7% or $2.6 million. Nonetheless, the sector

retained its market share.

The Petroleum Sector reported $564.2 million in net sales compared

with $500.4 million for the previous year. Sales in the residential and

commercial markets climbed 9.2% to $317.9 million, driven by higher

input costs.

The Motorists Department reported net sales of $204.4 million, up

18.5% or $31.9 million from 2009 with higher prices and sales volume

accounting for $25.1 million and $6.8 million, respectively, of this increase.

Propane Department sales rose 13.8% to $41.8 million, driven mainly

by prices. The price war and heightened competition dragged down net

earnings, compared with positive earnings in fiscal 2009.

Sales at AgriEst, Coop Agricultural Centre, fell by $1.6 million to

$22.9 million, following a lower average price of traded grains. Sales

volumes of dairy products rose a strong 13.0% while the Crop Production

Sector’s fertilizer sales volume achieved a record high.

We highlight the strong recovery in fertilizer sales, which are now back at

historical levels after declining for only one year.



Marketing OperationsThe review of our subsidiary Olymel L.P.’s operations for the year ended

October 30, 2010 prepared by Olymel’s Chief Executive Officer, Réjean

Nadeau, appears on page 36 of this Annual Report.

Administrative DepartmentsNet expenses at Administrative Departments and network development

totalled $18.9 million, compared with $18.3 million for the previous year.

Member Services, Innovation and Sustainable DevelopmentThis new sector, created in July 2010, brings together the following teams:

environment, agri-environment, innovation and growth, continuous

improvement and cooperative member services. During the last few

months of the year, its Management Committee had already identified

strong synergies that will enable the sector to foster the development

of La Coop’s network.

It is now inconceivable to talk about industrial growth without

making reference to sustainable development – striking the right balance

between corporate economic viability, social development and respect

for the environment.

Accordingly, La Coop fédérée is committed to adopting the sustain-

able development grading system designed by COOP de France. Nutrinor,

an agri-food cooperative in the Saguenay Lac St-Jean region, and La Coop

des deux-rives have agreed to participate in a pilot project for imple-

menting this grading system in the network.

La Coop fédérée is also working to quantify greenhouse gas emis-

sions and energy consumption in its facilities and to procure the tools for

tracking changes over time. With this project, La Coop aims to identify

opportunities for cutting greenhouse gases and draw up an action plan

for eliminating emissions on an ongoing basis.

Last year, the Agence québécoise pour l’efficacité énergétique issued

a report on preliminary energy audits performed in certain facilities in

La Coop’s network. Comprehensive energy audits are currently underway

and are expected to provide solutions for the 3 Rs of energy efficiency:

reduce, reuse, recycle.

Work has also been done to create or adapt tools for identifying

greenhouse gases and improving farm energy efficiency.

Last, La Coop is preparing itself for a possible carbon credit system

and is assessing how this concept could be applied in La Coop’s network

and farms.

As part of Chrysalide, La Coop is reviewing the agri-environment

team’s service offering from a sustainable agriculture perspective. The

aim is to make the network more competitive while ensuring sustain-

ability for agricultural businesses, and the objective is to propose a

sustainable agriculture service offering that meets the needs of agri-

cultural businesses.

La Coop is continuing its efforts to implement an agriculture biomass

sector that will allow La Coop’s network to propose attractive and sustain-

able solutions to make effective use of various agricultural residues and

300,000 hectares of land categorized as marginal. Over the last year, La

Coop has drawn up a comprehensive business plan setting out the initial

targets for La Coop’s network in the solid fuels and bio-refinery markets.

The plan calls for one of the feedmills shut down under Chrysalide to be

converted into a commercial and experimental biomass densification

plant. Other promising projects for making use of agricultural biomass

are under review.

To ensure better coordination, La Coop’s network has decided to

transition towards a standard chart of accounts for the cooperatives

and La Coop fédérée. In addition to La Coop fédérée, 48 cooperatives

that account for 84.0% of total sales had carried out this transition at the

end of fiscal 2010. In 2010, 50 cooperatives benefited from the financial

analysis services offered by La Coop. These analyses were based on a

database representing an amount of $1.9 billion or 88.0% of coopera-

tives’ total sales.

In 2010, 24 cooperatives accounting for 35.0% of total sales entered

into annual agreements for La Coop’s management services. The other

cooperatives opted instead for specific mandates representing 400 person

days such as sector performance evaluations, turnaround plans, invest-

ments/acquisitions, continuous improvement projects, implementing

management tools. Last, La Coop helped boards of directors and manage-

ment teams of 15 cooperatives to carry out strategic planning.

During the year, La Coop also helped three cooperatives with their

merger process and supported five others in their efforts to move towards


co-management with or without administrative outsourcing. As part of

succession plans for key network personnel, three management interns

completed one of their internship requirements in cooperative schools

under the supervision of Cooperative Member Services.

In collaboration with the Animal Production Sector and the project

management office, the Cooperative Member Services team proceeded

with the coordination of feedmill dismantling and compensation projects.

As at October 30, 2010, 26 feedmills had been shut down with 20 of

them receiving confirmations of compensation amounts payable. At the

end of 2010, the authorized compensation amounts totalled $434,000

or 10.6% below the initial budget. The team also helped cooperatives to

form regional advisor teams and coordinated a pilot project for a regional

head office in the Eastern Townships.

In 2010, a process analysis department was set up initially to support

the Chrysalide transformation process and its mandate was expanded

to include the documenting of organizational internal processes. This

documentation will be used in the continuous optimization of La Coop

network’s operations.

At mid-year, the Sector proposed a work plan to La Coop’s manage-

ment to implement the second phase of the continuous improvement

culture project. A presentation made to La Coop’s Extended Corporate

Governance Committee in July and the management seminar on continu-

ous improvement held in September resulted in the development of a new

approach based on Lean Management. By the end of the fiscal year, a Lean

Master certification program was already in place and several promising

projects were in the process of being planned and approved by managers

and the continuous improvement team. The selection of future projects

will be based more on priorities identified by senior management, ensur-

ing better alignment with core business objectives. Last, with advisors

providing support for continuous improvement in La Coop’s network,

cooperatives are benefiting more from this management method.

Business Strategies and Offer DevelopmentThe Business Strategies and Offer Development Sector is responsible for

developing business strategies and service offerings that are aligned with

the business objectives of different La Coop sectors.

Over the past year, this sector was entrusted with the management

of the Information Technologies and Systems Department and the Project

Management Department in addition to the task of heading the Marketing

and Communications Department. This new structure is expected to

generate synergies relating to business strategies, Chrysalide transforma-

tion projects and information technology needs. Methodologies and

approaches will be used to set project priorities, ensure better under-

standing of issues and changes, and obtain buy-in by all business sectors.

This sector was also entrusted with special projects, namely starting

up the La Coop hog network on behalf of General Management, including

the setting up of an expert hog production committee (SWAT team) and

an Olymel investment valuation by an external firm.

The Information Technologies and Systems Department is respon-

sible for delivering computerized business solutions that meet the needs

identified by different sectors of the organization. It is also responsible,

together with the Project Management Department, for the development

teams, and when applicable, for deploying, operating and ensuring the

maintenance, support and upgrading of IT solutions.

During the year, the Department developed a detailed plan for

restructuring the Information Technologies and Systems Department

and for allocating resources according to priorities. This plan covered

processes, organization, systems and infrastructure. All current projects

were reassessed in terms of their scope, timelines and required budgets.

An important project carried out by the Department consisted in

assessing and comparing Fidelio’s capacity to meet the network’s busi-

ness needs with other operational management tools available in the

market. The recommendations made at year-end favoured a stabilized

and optimized version of Fidelio. This project required a comprehensive

overhaul of governance and application performance in user cooperatives

as well as adjustments to development costs and strategies.

The Project Management Department’s senior managers are respon-

sible for accepting projects and helping business sectors to manage them.

The Animal Production Chrysalide project moved significantly ahead

during the year with business and governance models drawn up and

approved by the cooperatives.

It is now inconceivable to talk about industrial growth without

making reference to sustainable development – striking the right

balance between corporate economic viability, social development

and respect for the environment.



For the front office project, the sales territories for ruminant, hog

and poultry services as well as the regional sales team by production type

were determined and approved by cooperatives.

As for the back office, plants were identified and manufacturing

franchise contracts were approved by the cooperatives owning the plants.

A plan for transferring feed manufacture volumes to the right plants was

also implemented. Last, the compensation method for industrial-type

plants to be shut down was defined and approved.

The Sonic Chrysalide project was launched. The business and gov-

ernance models – prescribing the setting up of five regional groups for

the marketing and distribution of petroleum and propane products and

services – were developed and approved by the cooperatives. Accordingly,

the development of the new business model is underway.

In the Hardware and Farm Machinery Sector, the Department carried

out a business positioning analysis for expanding the warehouse in Trois-

Rivières serving more than 180 hardware stores and renovation centres

under the Unimat and La Coop banners. The aim is to better adapt to

the growth in Sector sales. The Department also performed a feasibility

study for a computerized supply management solution.

Last, the Department assessed the feasibility of migrating the JD

Edwards software package in all departments of the organization to a new

version, including the analysis of outsourcing payroll to various service

providers. The conclusions of the analysis confirmed the migration and

in-house payroll processing options.

The Marketing and Communications Department, which is also

responsible for managing the Creative and Printing Services as well as

publications, continued its work of developing service offerings in various

sectors : Animal Production, namely the hog sector; Hardware (Unimat

transition positioning); and Petroleum (strategic positioning).

The Department also carried out a tactical marketing plan for all

operational sectors, mainly relating to La Coop’s participation in provincial

shows, ad-hoc offering or positioning strategies, and various training

and information activities for the entire sales force of La Coop’s network.

The internal and external communications strategy was updated

to ensure that partnerships, donations and sponsorships support the

horizontally integrated offering strategies.

Some communication activities were also carried out under the

Chrysalide initiative for transforming the organization, including the

coordination and supervision of Chrysalide projects with the network

for approving key aspects of each project.

Human ResourcesLa Coop fédérée and its subsidiaries had a roster of 10,429 employees as

at year-end, down from 11,336 in 2009. This change resulted from various

personnel transfers across our operations.

The different strategies implemented to make La Coop known as

an employer of choice provide a framework for our efforts to energize

and motivate our current employees while attracting quality candidates

and ensuring the availability of skilled personnel despite the scarcity

of candidates for certain types of positions. The talent management

and succession program launched this year aims to ensure availability

of resources for key network positions.

During the year, several human resource staff were focused on ensur-

ing that the entire network complied with legal obligations resulting

from the Act respecting employment equity. In addition, salary structures

and employee benefits in the network are being gradually standardized,

based on changes made by different Chrysalide projects.

As in previous years, Académie La Coop was very active, offering 71

courses to over 2,800 directors and employees. La Coop invested almost

3.0% of its payroll in training, confirming its commitment to provide the

network with fully qualified personnel in all areas of operations.

The development program for elected members continues to be

provided to directors across La Coop’s network. Among active directors, 72

are designated members, 56 are companions and 95 are commanders, all

levels combined. Seventeen different courses were provided to directors

in connection with this program.

After a difficult year in 2008 and a solid recovery in 2009, the trust

fund of network pension plans succeeded in increasing the value of pen-

sion plans by 13.2% in 2010. Assets totalling $298.0 million are allocated

among seven investment funds, benefiting plan members from a range of

strategies designed to maximize their retirement income. With the pool-

ing of different network pension plans, management and administrative

The different strategies implemented to make La Coop known

as an employer of choice provide a framework for our efforts to

energize and motivate our current employees while attracting

quality candidates and ensuring the availability of skilled

personnel despite the scarcity of candidates for certain

types of positions.


expenses are limited to 0.81% of assets, a very competitive level compared

with the market.

Consolidation also benefited our group insurance program by pro-

viding for more effective insurance policy management in partnership

with employees. This strategy coupled with the group’s experience held

insurance premium increases to a minimum in relation to the market.

As regards labour relations, a total of 11 collective bargaining agree-

ments were negotiated during the year. All the agreements have terms

longer than four years. For facilities that retain feedmills, the expiry dates

of collective agreements ensure that operations will be maintained under

all circumstances.

With the success achieved since its inception and the participation

of 92 members, the Mutuelle de prévention generated network-wide

savings of approximately $1.5 million in 2010, or 37.0% of the contribu-

tions that would have been required without this combined participation.

Group contributions and prevention initiatives have led to a customized

contribution rate tied directly to the frequency and seriousness of acci-

dents, generating over $15.5 million in savings for cooperatives since the

group’s inception in 1997.

Financial Position

As at October 30, 2010, La Coop fédérée reported $1.29 billion in con-

solidated balance sheet assets, up from $1.22 billion at the end of the

previous year. The growth in total assets resulted from increases in

accounts receivable and inventories driven by higher volumes and favour-

able market conditions combined with higher goodwill and other assets

stemming from the first 4.4% portion of the acquisition of the 17.6%

non-controlling interest in Olymel L.P.

Current liabilities rose to $595.4 million from $436.4 million at the

end of last year, resulting primarily from an increase in the current portion

of long-term debt corresponding to the credit facility renewable in June

2011. Accounts payable and accrued liabilities increased as purchases of

inputs were higher than in the last year.

Working capital amounted to $92.9 million, down from $191.2 mil-

lion, representing ratios of 1.2 and 1.4, respectively, for fiscal 2010 and

2009. Working capital declined due to the credit facility’s inclusion in

the current portion of long-term debt. Excluding the current portion of

long-term debt relating to the credit facility, the working capital ratio as

at October 30, 2010 held steady at 1.4. La Coop’s consolidated debt ratio

remained at 36:64 at year-end, compared with the end of the previous

fiscal year.

Preferred shares, share capital and reserve totalled $440.5 million

as at fiscal year-end, compared with $412.5 million as at the end of fiscal

2009. These items accounted for 34.1% of total assets compared with

33.8% as at the previous year-end. La Coop reported a reserve of $320.5

million as at October 30, 2010, representing 72.8% of preferred shares

and equity.

Liquidity and Capital Resources

La Coop fédérée has access to the capital resources it needs through

agreements with Canadian financial institutions. The agreements with a

syndicated group of financial institutions provide an overall credit facility

of $300.0 million, renewable in June 2011.

Drawdowns under the credit facility as at the end of fiscal 2010

totalled $111.2 million, compared with $87.9 million as at the end of

2009. Since the credit facility must be negotiated before June 4, 2011 and

no renewal agreement had been signed with the financial institutions

as at October 30, 2010, the facility is included in the current portion of

long-term debt.

La Coop has other borrowing arrangements, such as a $30.0 mil-

lion fixed-rate credit facility with a four-year term, repayable in annual

instalments beginning in August 2011. La Coop also has an unsecured

fixed-rate three-year debenture with a balance of $25.0 million, repay-

able in annual instalments beginning in August 2012. Last, La Coop has

a fixed-rated term note with a balance of $17.5 million as at October 30,

2010, compared with $19.2 million in 2009.

The credit facility, term credit and term note are collateralized by

first rank hypothecs on a majority of the current and future tangible and

intangible assets of Olymel L.P. and its subsidiaries.

La Coop fédérée determines its capacity to invest in property, plant

and equipment in the short term based on cash flows from each of its

operating sectors. For fiscal 2010, investments in property, plant and

equipment totalled $34.4 million. A cautious approach to managing work-

ing capital items combined with stringent controls over additions to



property, plant and equipment have helped minimize financing costs. La

Coop fédérée met its financial obligations for each quarter of fiscal 2010

and complied with financial covenants under its financing agreements.

Derivative Financial Instruments

In accordance with its risk management strategy, La Coop uses derivative

financial instruments to manage foreign exchange risk, risk related to

certain commodity prices and interest rate risk. The derivative financial

instruments consist of foreign exchange contracts, currency swaps, com-

modity forward contracts and interest rate swaps. La Coop does not use

derivative financial instruments for speculative purposes.

Hedge accounting is used where La Coop documents its cash flow

hedging relationships and risk management objectives and strategy, and

demonstrates that they are sufficiently effective at hedge inception and

throughout the hedge period.

La Coop often sells and buys outside Canada, mainly in US dollars,

yen and Australian dollars. To manage foreign exchange risk, La Coop

uses foreign exchange contracts and currency swaps.

Foreign exchange contracts and currency swaps used by La Coop to

hedge against foreign exchange risk, mainly in respect of foreign currency

transactions, exceeded $1.20 billion in 2010.

La Coop also uses an interest rate swap to manage interest rate risk.

Gains and losses on the interest rate swap entered into to hedge future

cash flow transactions are accounted for in other comprehensive income

and reclassified to earnings when the hedged item affects earnings.

Risks and Uncertainties

La Coop is exposed to various risk factors that may influence the profit-

ability of its Marketing and Supply Operations in the normal course of

business.

Input Price Fluctuation RisksInput prices are determined by several external factors. Extreme price

volatility results from constant changes in supply markets. La Coop’s

economic environment is regulated by national and provincial policies

affecting slaughterhouse supply. As a result, changes in market policy

influence livestock availability and prices. La Coop strives to maintain

stringent controls over production costs to offset exposure to supply

prices and costs, which are beyond its control. La Coop mitigates this

risk factor by operating in a variety of sectors.

Food Safety RisksLa Coop is exposed to a number of industry-related risks, primarily in its

food processing and marketing operations. La Coop must manage expos-

ure to risks related to consumer product spoilage and contamination,

and any related liability. La Coop ensures compliance with government

requirements through stringent food safety controls at all its plants.

Livestock Health RisksThe prospect of livestock contamination and epidemics is a crucial risk

factor for La Coop. Epidemics can have a major impact on production

at processing plants and their access to raw material supply. Quality

management is of utmost importance to La Coop. Accordingly, improv-

ing internal traceability procedures and supporting government bodies

in the development of a national strategy are part of sound livestock

management.

Environmental RisksIn keeping with its commitment to the principle of social responsibility,

La Coop fédérée ensures that its business practices comply with diligent

environmental management principles.

Under its environmental policy, La Coop aims to comply with laws

and regulations, implement environmental emergency plans, perform

environmental assessments of businesses, operations or property it

intends to acquire or start up, communicate its environmental goals and

projects to its employees and managers, and report on environmental

management activities to the Board of Directors every quarter through

its Committee for Cooperative Education and Sustainable Development

and the Environment Department’s Annual Report.

La Coop fédérée also audits its facilities and operations on an

ongoing basis to ensure compliance with regulations and recognized

environmental practices. Audit results are disclosed and reported to facil-

ity managers, senior management and to the Board of Directors to ensure

full knowledge of environmental conditions and to support informed

decision-making. With environmental audits of 33 facilities carried

With continued gradual implementation of the Chrysalide Project

in the Animal Production, Petroleum and Hardware Sectors, the

agricultural cooperative network will be even better placed and

equipped to compete in its markets and fulfill its mission

among members.


out by the Department in 2009-2010, managers are aware of potential

improvements they can make in terms of environmental management.

These facilities included 12 Agromarts of the Crop Production Sector of

Agronomy as part of their ongoing post-acquisition due diligence.

Furthermore, to maintain consistent environmental compliance for

La Coop’s operations, the Environment Department, in collaboration

with the Crop Production and Animal Production Sectors, implemented

in certain facilities a pilot project for an environmental management

system based on the ISO 14001 standard and adapted for these facilities’

operations. The implementation of monitoring and disclosure procedures

allows employees to ensure diligent environmental management and

promotes follow-up by facility managers.

In addition, the Environment Department provided steady technical

support to Supply Operations with the aim of resolving and preventing

environmental risks specific to their operations. Accordingly, more than

a hundred ad-hoc projects were carried out across the organization. The

services provided – environmental assessments of acquisitions or asset

sales, regulatory compliance audits, management of environmental per-

mits issued by governments, and prevention projects – enabled Supply

Operations to maintain high environmental management standards.

La Coop’s network also benefited from this member service with

70 environmental projects carried out in 2009-2010, demonstrating the

intention of affiliated cooperatives to adhere to environmental manage-

ment standards.

Last, the Guide d’aide au bon voisinage, a 2010 publication reflecting

La Coop’s concern for corporate social responsibility towards external

stakeholders located near its facilities, will be made available to Supply

Operations to ensure its facilities have a healthy relationship with the

surroundings on which their operations could have an impact. This guide

recommends a simple process for profiling facilities, identifying issues

related to good neighbourliness and drawing up action plans, and also

includes work tools and advice for ensuring good neighbourliness.

Global Market RisksLa Coop’s exports are affected by a number of economic variables that

influence global markets. Export volumes are dependent on economic

conditions in importing countries and, in some cases, on trade barriers.

Export growth and profitability are closely linked to the strength of these

markets and their compliance with international trade treaties and rules.

Financial Instrument RisksLa Coop has provided qualitative and quantitative information regarding

its exposure to financial instrument risks, including credit risk, interest

rate risk, liquidity risk, foreign exchange risk and the other price risks.

Note 19 to the consolidated financial statements discloses the nature

and extent of risks arising from financial instruments and related risk

management.

Conclusion

Following a slow start, La Coop fédérée ended its fiscal year on a strong

note, reporting satisfactory results given the hog industry crisis that

heavily undermined performance at the beginning of the year.

Olymel’s relatively modest results coupled with the very strong earn-

ings at our subsidiary Agronomy and the considerable contributions of all

crop and animal production operations, grain marketing, hardware and

petroleum products enable La Coop to proceed with numerous network

projects, carry out strategic acquisitions, continue improving services to

members, meet financial objectives set by the Board of Directors and

comply with the required banking ratios.

With continued gradual implementation of the Chrysalide Project in

the Animal Production, Petroleum and Hardware Sectors, the agricultural

cooperative network will be even better placed and equipped to compete

in its markets and fulfill its mission among members.

Despite La Coop’s satisfactory results, which are passed on to affili-

ated cooperatives and ultimately to our members, we should not forget

that the agricultural sector is currently undergoing one of the most

extensive restructuring processes in its history. The farm income crisis

combined with the changes proposed by the provincial governments to

income support programs will prompt many producers to substantially



review their business model and to change and very likely strengthen

their relationships with La Coop’s network.

Clearly, the challenges are numerous. La Coop fédérée must keep a

close eye on current realities and ensure that actions taken give priority

to the members and their cooperatives. The Québec agriculture sector is

undergoing profound changes. Against this backdrop, if we want to help

member producers and their cooperatives to generate higher profits, if we

want to protect and even create jobs, we must innovate on an ongoing

basis and constantly review our ways of doing things and develop an

authentic coordination of La Coop’s network. This is the thrust of our

mission and our Chrysalide projects.

Leveraging our cooperative advantage and the expertise of our

people, the agricultural cooperative network is firmly committed to

strengthening our leadership position and becoming the partner of choice

in the successes of our members. Our values of solidarity and commit-

ment to forging a stronger, more cohesive cooperative network will be

our ultimate legacy to the agricultural cooperative movement.

I would like to take this opportunity to offer warm thanks to my

colleagues on the Extended Corporate Governance Committee and the

leaders across our network of affiliated cooperatives and at our Olymel

subsidiary for their loyalty, their commitment and their support in achiev-

ing these results.

And I would be remiss in concluding this report without extending

my heartfelt thanks to our president, Denis Richard, and all Board

members of La Coop fédérée, for their exceptional support and trust

throughout the year.

Claude LAFLEUR

Chief Executive Officer


Value with taste

Pork can be tastier, and more tender – and you don’t have to

use a highly seasoned marinade. For the Olymel/La Coop group

of experts who work to improve profitability in the Hog Sector,

the secret is in the feed recipe. As the result of extensive testing,

they are developing a hog feed program that improves the

quality of the meat.

Employees + innovationPork à la Coop


Value with taste

When innovating means maintaining market position, it’s win-win all around!

First, Olymel and the La Coop network can leverage the new feed program to

retain key markets for Québec’s Hog Sector. Second, La Coop’s hog producers

will earn more through refunds and discounts. And it’s also a promising

investment that should generate even more income and help cover

production costs. Which means more money in the piggy bank!

Producers + benefitsPork à la Coop


Value with taste

By processing quality pork, Olymel not only boosts its sales and

makes brisk business for local producers, it satisfies the demands

of consumers… locally, and farther afield. Tender and tasty – quality

pork to make your mouth water! Thanks to La Coop’s feed program,

our hogs are gaining in popularity both here and abroad.

Consumers + tastePork à la Coop

Olymel Overview


year’s performance. That said, the results show that we must stay the

course with measures for adjusting to a strong currency.

Despite modest results, Olymel made significant investments in

several operational sectors over the year to maintain our competitiveness

and improve our profitability. Results in the first quarter of fiscal 2011

are highly encouraging in this respect.

Although the US dollar’s weakness was the primary cause for the

decline in performance, other factors also had an impact. Uncertainty

over the Farm Income Stabilization Insurance (FISI) program for hog farm-

ers and the subsequent decrease in the number of hogs slaughtered in

Québec also impacted Olymel’s operations and performance. In addition,

the new pork marketing agreement that sets prices according to the US

benchmark price was in operation for an entire year for the first time,

applying upward pressure on supply costs.

Unsurprisingly, market conditions were harsh in the Eastern Fresh

Pork Sector, resulting in a loss compared with last year’s profit. Undeterred,

the Western Fresh Pork Sector performed better, generating profits for

the third straight year.

The processed pork and bacon sectors reported losses in contrast

to last year’s profits. A greater inflow of US products into the Canadian

market continued to apply pressure on bacon sector margins. Results in

these two sectors were dragged down by non-recurring costs incurred

on biosecurity efforts mainly related to treating products for the Listeria

bacteria.

Poultry Sector results were up sharply from the previous year, driven

by better supply and demand conditions. In the Turkey Sector however,

the strong demand anticipated by the industry did not materialize, lead-

ing to higher inventories. But losses were greatly reduced compared with

last year.

Olymel generated revenues of $2.16 billion for fiscal 2010, up $69

million from the previous year. The increase is attributable to higher sales

volumes in the Western Fresh Pork Sector coupled with better market

prices for fresh pork.

In Québec, products such as bacon, hot dog sausages, breakfast

sausages, deli meats and frozen poultry marketed under the Lafleur,

Flamingo, Olymel and Village brands held on to their strong market

position. Sustained efforts to penetrate markets Canada-wide with the

Olymel brand, mainly supported by effective TV advertising campaigns,

led to significant breakthroughs with leading Canadian distributors in

Ontario, Western Canada and the Maritime provinces.

Fresh Pork

The Eastern Fresh Pork Sector’s results declined compared with the previ-

ous year, despite the slightly improved US meat margin and an increase

+

Réjean NadeauPresident and

Chief Executive Officer, Olymel

Results That Mirror Processing Industry Challenges

Fiscal 2010 results are weaker compared with last year’s performance

and well below the fiscal 2008 high. Although falling short of owners’

expectations, these results are acceptable under the circumstances.

Undoubtedly, the most significant factor underlying lower margins is

the Canadian dollar’s persistent trend towards parity with the US cur-

rency. While influencing Olymel’s exports, a strong dollar also makes US

products more competitive in the domestic market. Against this difficult

backdrop, export sales held steady and even slightly improved on last


+

Paul NoiseuxChief Financial Officer,

La Coop fédérée/Olymel

+

Claude LafleurChief Executive Officer,

La Coop fédérée

+

Denis RichardPresident, La Coop fédérée

and Chairman of the Board Olymel

in hogs’ weight. The decline is mainly explained by the stronger Canadian

dollar, lower volumes and the use of the benchmark US price to set hog

purchase prices.

In the Québec pork sector, the integrated approach with our owners

and other industry partners combined with adaptation to conditions

resulting from the new pork marketing agreement and FISI revamping

should allow Olymel to better meet market expectations and specific

demand for value-added products. Amidst a fast-evolving Québec pork

industry, producers and processors should be able to leverage the full

potential synergy of a better coordinated value chain.

The Western Fresh Pork Sector generated profits for the third con-

secutive year. Although affected by the Canadian dollar’s strength, the

sector benefited from a sharp increase in slaughter volumes, the higher

US meat margin, a favourable client and product mix due mainly to chilled

products, tighter control of operating expenses and advantageous supply

conditions.

Processed Pork And Bacon

The secondary pork processing sector’s performance in 2010 fell short

of expectations. An unfavourable client and product mix contributed

to a reduction in the meat margin while selling prices were misaligned

with raw material prices. A considerable portion of international and

domestic sales was also hurt by the robust Canadian currency. However,

lower overheads and improved efficiency made it possible to maintain

production costs at reasonable levels.

+38 Annual Report 2010 - La Coop fédérée+38

their needs and satisfying consumers remain the best options for staying

competitive, ensuring a stable future for our employees and fulfilling our

owners’ expectations.

Across all our operations, top priority is given to biosecurity efforts

aimed at producing quality consumer-safe food. Since its inception,

Olymel has complied with the industry’s highest hygiene and biosecur-

ity standards under the supervision of the Canadian Food Inspection

Agency (CFIA).

During the year, Olymel made considerable investments to develop

new products, upgrade its procedures and equipment, and adopt new

high-performing technologies. To minimize the environmental impact

of its operations, Olymel made a major investment in its Vallée-Jonction

plant in Beauce by building two aeration tanks that will increase tenfold

our waste water treatment capacity. Further significant investments

were made to achieve our objective to reduce our ecological footprint in

packaging, transportation and water usage.

Human capital is also of primary importance to Olymel. Its greatest

value-added resource is its personnel, including executives and employees

in sales, marketing, operations, production, packaging, distribution, trans-

portation and administrative support services. With employee retention

now the number one challenge in the manufacturing industry, Olymel is

making considerable efforts to retain its personnel.

In labour relations, three collective bargaining agreements in vari-

ous sectors were renewed during fiscal 2010. The absenteeism rate fell

for the fifth straight year while the frequency and gravity of workplace

injuries also decreased. All that is necessary is done to ensure these trends

continue.

Last, I thank all personnel for the commitment they make every day

to Olymel. I would also like to express my appreciation for our owners’

active collaboration throughout this year. I am also very grateful to all

members of the Board of Directors, and particularly to its Chairman Denis

Richard. Under his governance, the Board has made an invaluable contri-

bution to our development and future.

Réjean NADEAU

President and Chief Executive Officer, Olymel L.P.

Bacon sector results were once again disappointing this year with

higher supply costs leading to lower volumes. The greater penetration of

the Canadian market by US products, both precooked and fresh, coupled

with the sharp rise in the Canadian dollar weighed on performance.

Fresh Poultry

The primary poultry processing sector posted strong results, driven by

factors such as the higher meat margin, a favourable client and product

mix, and improved efficiency. Olymel reported an increase in slaugh-

tering over the fiscal year, mainly attributable to a higher poultry volume

resulting from our partnership with New Brunswick producer Westco

Group, under the Sunnymel project. Our interest in Volailles Giannone

also yielded positive results for the year. The poultry sector is faced with

a permanent challenge, namely finding the right balance between supply

and demand in the Canadian market to avoid falling margins.

The Turkey Sector reported a loss for the fiscal year as Olymel slaugh-

tering volumes decreased despite a higher meat margin, but losses were

cut by half compared with last year. Prices plunged after record quotas

granted in fiscal 2009 to meet an increase in demand that did not mater-

ialize led to a sharp rise in Canadian inventories.

The Sunnymel project – a partnership between Olymel and Westco

Group – completed its first full year of operations in 2010, generating

profits. Over the last two years, Westco Group won several legal battles

relating the right of a producer to choose a supplier for slaughtering its

poultry. Sunnymel’s project to build a poultry slaughterhouse in Clair,

New Brunswick is underway.

Processed Poultry

The processed poultry sector generated exceptional results in 2010, bol-

stered largely by the increase in the meat margin, which resulted primarily

from a combination of higher selling prices and lower supply costs. For the

next few years, the objectives are to maintain selling prices at a healthy

profitable level, keep production costs competitive and actively continue

developing national and private brands.

Remaining A Leader In Agri-Food Processing

Olymel has the size and the strengths it needs to meet all challenges and

deal with all issues in 2011. Serving clients better everywhere, meeting

Olymel overview


Value now

Hooray for online ordering! In collaboration with the organizing committee of the Unimat show, IT manager Gail Faler at the Trois-Rivières distribution centre has set up an efficient and user-friendly or-dering system. Via a secure site, buyers can browse the catalogue, check out promotions before the show opens and place orders at their convenience. At the show, all they have to do is fill their orders or make any changes they want using a laptop that’s available for buyers. What’s more, buyers can see the totals of their orders at any time, so they can stay right on budget. With this innovation, it’s thumbs up to real time order tracking and thumbs down to paper catalogues… and potential errors entering orders on forms.

Employees + innovationIT makes life better


Value now

An informed buyer is a smart buyer!

With the new IT system, customers can

browse product offerings, promotions

and discounts before the show. With

their selections made ahead of time,

all they have to do at the show is con-

firm their orders with a mouse click…

on a laptop that’s provided. That gives

them more time to visit the exhibits

and see what’s new. Not to men-

tion that no paper catalogues means

considerable savings… Which means

higher refunds for members!

Producers + satisfactionIT makes life better


Making buying easier for cooperatives and reducing the risk of error in

order-taking boosts efficiency and cuts costs. And in the end, consumers

win – with lower prices and a choice of products that better meet their needs.

Mother Nature should thank Gail Faler, too. Not using paper to print

catalogues or fuel to deliver them are also positive actions – great for

the environment, and a boon for future generations!

Consumers + SavingsIT makes life better

Value now

Management Report


The consolidated financial statements and other financial information included in the

Annual Report of La Coop fédérée (“La Coop”) for the year ended October 30, 2010

are management’s responsibility and have been approved by the Board of Directors. This

responsibility involves the selection of appropriate accounting methods as well as the use

of sound judgment in the establishment of reasonable and fair estimates according to

Canadian generally accepted accounting principles and the application of regulations of the

Cooperatives Act. Financial information presented elsewhere in this Annual Report is consis-

tent with that in the consolidated financial statements.

Management maintains accounting and administrative control systems designed to provide

reasonable assurance regarding the accuracy, relevance and reliability of financial infor-

mation, as well as the efficient and orderly conduct of La Coop’s affairs. The Internal Audit

Department evaluates accounting and internal control systems on an ongoing basis and

regularly reports its findings and recommendations to management and the Audit Committee.

The Board of Directors ensures that management assumes its responsibilities with respect

to financial reporting and review of the consolidated financial statements and Annual

Report, mainly through its Audit Committee consisting of outside directors. The Audit

Committee holds regular meetings with the internal and external auditors and with

management representatives to discuss the application of internal controls and reviews

the consolidated financial statements and other matters related to financial reporting. The

Audit Committee reports and submits its recommendations to the Board of Directors.

The auditors appointed by the members, Ernst & Young LLP, Chartered Accountants, have

audited the consolidated financial statements and their report appearing hereinafter indi-

cates the scope of their audit and their opinion thereon.

Claude LAFLEUR Paul NOISEUX, CGA

Chief Executive Officer Chief Financial Officer

Montréal, January 4, 2011

Auditors’ Report


To the members of

La Coop fédérée

We have audited the consolidated balance sheet of La Coop fédérée (“La Coop”) as

at October 30, 2010 and the consolidated statements of earnings and reserve,

comprehensive income and cash flows for the year then ended. These financial statements

are the responsibility of La Coop’s management. Our responsibility is to express an opinion

on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing stan-

dards. Those standards require that we plan and perform an audit to obtain reasonable

assurance whether the financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts and disclosures in

the financial statements. An audit also includes assessing the accounting principles used

and significant estimates made by management, as well as evaluating the overall financial

statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material

respects, the financial position of La Coop as at October 30, 2010 and the results of

its operations and its cash flows for the year then ended in accordance with Canadian

generally accepted accounting principles.

Montréal, Canada

January 4, 2011

[except as to notes 4, 5 and 14,

which are as of January 13, 2011]

1 CA auditor permit No. 08697

1


Consolidated Balance Sheet As at October 30, 2010 and October 31, 2009


ASSETS

Current assetsAccounts receivable $ 351,787 $ 319,964Inventories [note 6] 309,954 293,715Prepaid expenses 23,893 10,932Derivative financial instruments [note 19] –– 524Future income tax assets [note 5] 658 393Investments – current portion [note 7] 1,972 2,064

688,264 627,592Investments [note 7] 35,922 36,382Property, plant and equipment [note 8] 454,586 459,860Employee future benefit asset [note 13] 19,289 17,306Goodwill [note 9] 67,872 59,596Other assets [note 10] 25,304 20,780

$ 1,291,237 $ 1,221,516

LIABILITIES AND EQUITY

Current liabilitiesBank overdrafts $ 22,834 $ 15,738Short-term borrowings [note 11] 31,969 36,744Accounts payable and accrued liabilities 396,051 364,729Income taxes payable 1,348 1,396Derivative financial instruments [note 19] 2,968 2,963Patronage refunds payable [note 4] 2,300 3,000Redeemable preferred shares – current portion [note 14] 3,970 3,501Long-term debt – current portion [note 12] 133,926 8,343

595,366 436,414Long-term debt [note 12] 78,078 183,449Employee future benefit liability [note 13] 34,901 32,220Future income tax liabilities [note 5] 23,966 18,950Non-controlling interest [notes 2 and 17] 123,304 141,899Preferred shares [note 14] 4,632 4,632

Equity Share capital [note 14] 111,396 102,552Reserve 320,520 301,797Accumulated other comprehensive income [note 15] ( 926 ) ( 397 )

$ 1,291,237 $ 1,221,516

Commitments and contingencies [note 17]

The notes are an integral part of the consolidated financial statements.

On behalf of the Board,

Denis RICHARD, Director Ghislain CLOUTIER, Director


Consolidated statements of earnings and reserve

Consolidated Statement of Comprehensive Income

Years ended October 30, 2010 and October 31, 2009



Revenues $ 3,947,871 $ 3,919,963

Operating expenses [note 3]Cost of sales and selling and administrative expenses 3,902,370 3,840,313Financial expenses 10,083 14,683

3,912,453 3,854,996

Operating income 35,418 64,967

Other income and expensesShare of results of entities subject to significant influence 2,934 5,301Gains (losses) on disposal of assets 650 (2,309 )

3,584 2,992

Earnings before non-controlling interest, patronage refunds and income taxes 39,002 67,959Non-controlling interest 2,925 14,613

Earnings before patronage refunds and income taxes 36,077 53,346

Patronage refunds [note 4] 11,500 15,000Income taxes [note 5] 5,854 10,746

Net earnings 18,723 27,600

Reserve, beginning of year 301,797 274,197

Reserve, end of year $ 320,520 $ 301,797



Net earnings $ 18,723 $ 27,600

Other comprehensive incomeChange in fair value of derivative financial instruments designated as cash flow hedges

Unrealized losses, net of taxes of $1,634 ($2,721 in 2009) ( 3,473 ) ( 6,045 )Reclassification of gains and losses to earnings, net of taxes of $1,386 ($4,050 in 2009) 2,944 8,870

( 529 ) 2,825

Comprehensive income $ 18,194 $ 30,425



Consolidated Statement of Cash Flows Years ended October 30, 2010 and October 31, 2009


OPERATING ACTIVITIES

Net earnings $ 18,723 $ 27,600Non-cash items:

Amortization [note 3] 56,698 54,164Gains (losses) on disposal of assets ( 650 ) 2,309Future income taxes 229 1,912Loss on derivative financial instrument 61 138Change in employee future benefits 698 ( 205 )Non-controlling interest 2,925 14,613Share of results of entities subject to significant influence ( 2,934 ) ( 5,301 )Patronage refunds paid in common shares 9,200 12,000

84,950 107,230

Net change in non-cash working capital related to operations [note 16] ( 30,907 ) 43,894

Cash flows related to operating activities 54,043 151,124

INVESTING ACTIVITIES

Acquisition of non-controlling interest in subsidiary [note 2] ( 36,720 ) ––Business acquisition [note 24] –– ( 56,202 )Acquisitions of investments ( 1,410 ) ( 9,494 )Proceeds on disposal of investments 2,940 2,793 Dividends received from entities subject to significant influence 1,787 2,047 Additions to property, plant and equipment ( 34,453 ) ( 46,380 )Proceeds from disposal of property, plant and equipment 1,705 320Additions to other assets ( 3,790 ) ( 4,997 )Proceeds on disposal of other assets –– 40

Cash flows related to investing activities ( 69,941 ) ( 111,873 )

FINANCING ACTIVITIES

Net change in short-term borrowings ( 4,775 ) ( 24,772 )Proceeds from issuance of long-term debt 23,541 11,122Repayment of long-term debt ( 3,803 ) ( 3,721 )Payment to non-controlling interest ( 6,274 ) ( 9,734 )Proceeds from issuance of preferred shares 3,597 2,314Redemption of preferred shares ( 3,501 ) ––Proceeds from issuance of common shares 23 46Redemption of common shares ( 6 ) ( 13,006 )

Cash flows related to financing activities 8,802 ( 37,751 )

Decrease (increase) in bank overdrafts ( 7,096 ) 1,500Bank overdrafts, beginning of year ( 15,738 ) ( 17,238 )

Bank overdrafts, end of year $ ( 22,834 ) $ ( 15,738 )

Additional disclosuresInterest paid $ 13,475 $ 16,447Income taxes paid 5,673 15,608




Notes to Consolidated Financial Statements

[All tabular amounts are in thousands of dollars.]

BUSINESS DESCRIPTIONLa Coop fédérée [“La Coop”] was established under a special act of the Province of Québec. It is active mainly in Marketing and Supply Operations. The Marketing segment focuses on the processing and sale of pork and poultry products. Supply Operations provides farmers with goods and services to support their farming operations, and distributes and sells petroleum products and services.

SIGNIFICANT ACCOUNTING POLICIESThe consolidated financial statements of La Coop have been prepared by management in accordance with Canadian generally accepted accounting principles. The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized below.

Basis of consolidation The consolidated financial statements include the accounts of La Coop, its wholly owned subsidiaries and majority-owned subsidiary Olymel L.P. They also include La Coop’s interest in its joint ventures, owned directly or via its subsidiary Olymel L.P., accounted for using the proportionate consolidation method.

InventoriesRaw materials and supply inventories are valued at the lower of cost established in ac-cordance with the first in, first out method and net realizable value. Goods in process and finished goods inventories are valued at the lower of cost under the first in, first out or average cost method, depending on the segment, and net realizable value.

InvestmentsInterests in entities subject to significant influence are accounted for under the equity method and other long-term investments are accounted for based on their financial asset classification.

Impairment of assets

Financial assets

Allowance for doubtful accountsAccounts receivable carried at amortized cost are subject to continuous impair-ment review and are classified as impaired when, in the opinion of La Coop, there is reasonable doubt that credit related losses have occurred taking into consideration all circumstances known at the review date.

Allowances for credit lossesInvestments in the cooperatives classified as financial assets available for sale are written down if analyses of cooperatives’ financial reports show they are experiencing financial difficulties.

Mortgage loans and notes receivable carried at amortized cost are subject to continuous impairment review and are classified as impaired when, in the opinion of La Coop, there is reasonable doubt as to the ultimate collectibility of a portion of principal and interest. An impairment is established by analyzing certain financial ratios of these entities.

Long-lived assetsLong-lived assets held for use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is assessed by comparing the carrying amount of an asset with its expected future net undiscounted cash flows from use together with its residual value. If such assets are considered to be impaired, the impairment charge is measured by the amount by which the carrying amount of the assets exceeds their fair value. An impairment loss is recognized and presented in the consolidated statement of earnings and the carrying amount of the asset is adjusted to its fair value.

Property, plant and equipmentProperty, plant and equipment are stated at cost. They are amortized over their useful life on a straight-line basis at the following rates:

Pavement 4% to 20%Buildings 3 1/3% to 10%Machinery and equipment 5% to 33 1/3%Automotive equipment 6 2/3% to 33 1/3%Leasehold improvements Lease term

GoodwillGoodwill represents the excess of the purchase price over the fair value of net assets acquired.

Goodwill is accounted for at cost and amortized on a straight-line basis over a period generally not exceeding 20 years. At each balance sheet date, La Coop evaluates whether there has been a permanent impairment in value of the carrying amount of goodwill. In doing so, La Coop determines the recoverability of goodwill based on an estimate of the undiscounted cash flows over the remaining amortization period of each business to which the goodwill relates.

The goodwill of subsidiary Olymel L.P. is tested for impairment annually or more frequently if events or changes in circumstances indicate a possible impairment. Goodwill is tested for impairment annually using a two-step test. Under the first step, the fair value of a reporting unit is compared with its carrying amount. If the fair value is greater than the carrying amount, no impairment is deemed to exist and the second step is not required. If the fair value is less than the carrying amount, the second test must be performed to estimate the implied fair value of the reporting unit’s goodwill. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value of the identifiable net assets of the reporting unit. Any impairment of the carrying amount in relation to the fair value is charged to consolidated earnings in the year in which the loss is incurred.

Other assets

TrademarksTrademarks are stated at cost. They are amortized on a straight-line basis over a period of 15 years.

Client lists Client lists are stated at cost. They are amortized on a straight-line basis over a period of seven years.

Rights Rights consist of production rights and exclusive supply rights. They are accounted for at cost and amortized on a straight-line basis over a 10-year period for produc-tion rights and over a 10- or 20-year period for exclusive supply rights.

Deferred chargesDeferred charges include the costs related to a client supply contract and are amortized on a straight-line basis over a period of six years.

SoftwareSoftware and information technology development project costs are amortized on a straight-line basis over periods of three to eight years. The amortization of infor-mation technology development projects begins at project completion.

Research and developmentResearch and development costs are expensed in the consolidated statement of earnings in the year in which they are incurred.

Notes to Consolidated Financial Statements Years ended October 30, 2010 and October 31, 2009


SIGNIFICANT ACCOUNTING POLICIES [cont’d]

Long-lived asset retirement obligationsThe fair values of estimated asset retirement obligations are recorded as liabilities when the obligations are incurred pursuant to a legal obligation related to a long-lived asset retirement. The associated cost is capitalized as part of the cost of the related asset. Over time, the liabilities are accreted for the change in their present value and the initial capitalized costs are amortized over the useful lives of the related assets. The related accretion is recorded in cost of sales and selling and administrative expenses, and the amortization charge is included in amortization of property, plant and equipment.

Revenue recognitionRevenue is recognized when the finished products are shipped to clients and collection is reasonably assured.

Foreign currency translationTransactions in foreign currencies are translated into Canadian dollars using the temporal method. Under this method, monetary items in the consolidated balance sheet are translated at the rates of exchange prevailing at year-end while non-monetary items are translated at the rates prevailing on the transaction dates. Revenue and expense items are translated at the rates of exchange prevailing on the transaction dates. Gains and losses on translation of foreign currencies are accounted for in consolidated earnings.

Employee future benefitsLa Coop has a number of defined benefit and defined contribution plans providing pension and post-retirement benefits to most of its employees. Defined benefit pension plans are based on either career earnings or average final earnings. Certain pension benefits are indexed according to economic conditions.

Post-retirement benefits offered by La Coop to its retired employees include health care benefits and life insurance.

The cost of pension and post-retirement benefits earned by employees is determined using actuarial calculations under the projected benefit method prorated on service based on management’s best long-term assumptions of salary escalation, the retirement and termination ages of employees and estimated health care costs.

For the calculation of the expected long-term rate of return on plan assets, these assets are measured at fair value. Accrued benefit obligations are discounted based on current market interest rates.

Past service costs arising from plan amendments are deferred and amortized on a straight-line basis over the average remaining service period of active employees at the amendment date.

Actuarial gains or losses arise from the difference between the actual long-term rate of return on plan assets for a period and the expected rate of return on plan assets for that period, or from changes in the actuarial assumptions used to determine the accrued benefit obligation. The excess of net actuarial gains and losses over 10% of the greater of accrued benefit obligations and the fair value of plan assets is recorded in consolidated earnings over the average remaining service period of active employees. The average remaining service period of active employees covered by the seven pension plans ranges from nine years to 13 years and the average remaining service period of active employees covered by the early retirement program ranges from one year to seven years. The average remaining service period of active employees covered by the other post-retirement benefit plans is between 14 and 15 years.

LeasesThe Company accounts for capital leases in instances when it has acquired substantially all the benefits and risks incident to ownership of the leased property. Leases that do not transfer substantially all the benefits and risks incident to ownership of the property are accounted for as operating leases.

Patronage refundsThe amount and terms of payment of patronage refunds are determined by the Board of Directors after year-end. Patronage refunds are calculated based on members’ purchased volumes and are accounted for in the year to which they relate. Where patronage refunds are paid in shares, such shares are considered to be issued at the year-end preceding the Board of Directors’ resolution.

Financial instrumentsFinancial instruments have been classified in one of the four following asset categories: held-for-trading, available-for-sale, held-to-maturity, and loans and receivables. Liabilities have been classified under one of the two following categories: held-for-trading or other financial liabilities. Financial instruments are initially measured at fair value and subsequent measurements depend on their classification.

La Coop has classified them as follows:

Accounts receivable are classified under loans and receivables and are initially measured at fair value. Subsequent measurements are recorded at amortized cost according to the effective interest method.

Bank overdrafts, short-term borrowings, accounts payable and accrued liabilities and patronage refunds payable are classified as other financial liabilities and are initially measured at fair value. Subsequent measurements are recorded at amortized cost according to the effective interest method.

Investments in the cooperatives presented in investments are classified as available-for-sale and are measured at cost since they have no quoted market price in an active market. Investments in entities subject to significant influence accounted for under the proportionate consolidation method are excluded from the new standards. Mortgage loans and notes receivable are classified under loans and receivables and are initially measured at fair value. Subsequent measurements are recorded at amortized cost using the effective interest method.

Preferred shares and long-term debt are classified under other financial liabilities and are initially measured at fair value. Subsequent measurements are recorded at amortized cost using the effective interest method. For La Coop, this measurement is generally equal to cost due either to the use of a floating rate for certain borrowings or because management believes that the fair value of fixed-rate borrowings does not differ greatly from their carrying value given the imminent maturity of some and the rates that could be obtained currently by La Coop for borrowings with similar conditions and maturities.

Interest income and expense from financial assets and liabilities are recognized under financial expenses in the consolidated statement of earnings. Gains and losses related to financial assets and liabilities are recognized under cost of sales and selling and admin-istrative expenses. When related to disposition, these gains and losses are recognized under gains (losses) on disposal of assets.

Transaction costsLong-term debt transaction costs are capitalized and netted against the carrying value of the related financial liability. They are amortized at cost using the effective interest method.

Derivative financial instrumentsIn accordance with its risk management strategy, La Coop uses derivative financial instru-ments to manage foreign exchange risk, risk related to certain commodity prices and interest rate risk. The derivative financial instruments consist of foreign exchange con-tracts, foreign exchange swaps, commodity forward contracts and interest rate swaps. La Coop does not use derivative financial instruments for speculative purposes.

Hedge accounting is used where La Coop documents its cash flow hedging relationships and risk management objectives and strategy, and demonstrates that they are suf-ficiently effective at hedge inception and throughout the hedge period.




SIGNIFICANT ACCOUNTING POLICIES [cont’d]

Derivative financial instruments [cont’d]The derivative financial instruments that La Coop chose to designate as cash flow hedg-ing items are classified under financial assets and liabilities available for sale. They are measured at fair value, which is the approximate amount that might be obtained in settlement of such instruments at prevailing market rates. Gains and losses resulting from remeasurement at year-end are reported in other comprehensive income. The ineffective portion, if any, is recognized in the consolidated statement of earnings. The amounts recognized in other comprehensive income are reclassified to the consolidated statement of earnings when the hedged item affects earnings. The gain or loss portion of a reclassified hedging item is reported as an adjustment to the revenues from or the expense of the related hedged item. Realized gains and losses on these contracts are presented in cost of sales and selling and administrative expenses.

Foreign exchange contracts and currency swapsLa Coop often sells and buys outside Canada, mainly in US dollars, yen and Aus-tralian dollars. To manage foreign exchange risk, La Coop uses foreign exchange contracts and currency swaps. Gains and losses on foreign exchange contracts and currency swaps entered into to hedge future transaction cash flows are accounted for in other comprehensive income and reclassified to earnings when these trans-actions occur.

Interest rate swapLa Coop also uses an interest rate swap to manage interest rate risk. Gains and losses on the interest rate swap entered into to hedge cash flows are accounted for in other comprehensive income and reclassified to earnings when the hedged item affects earnings.

A hedging relationship is terminated if the hedge ceases to be effective, and the unrealized gain or loss on the related derivative financial instrument is recognized in consolidated earnings along with subsequent changes in the fair value of the derivative financial instrument.

Derivative financial instruments that are not designated as hedge items are classified under financial assets and liabilities held-for-trading. They are measured at fair value, which is the approximate amount that might be obtained in settlement of such instruments at prevailing market rates. Gains and losses resulting from remeasurement at year-end are reported in the statement of consolidated earnings.

Commodity forward contractsLa Coop often buys and sells grain to cover certain identifiable future risks on the price of these commodities. La Coop does not use hedge accounting for commodity forward contracts. Therefore, gains and losses on these contracts, realized or not, are presented in cost of sales and selling and administrative expenses.

Interest rate swapLa Coop also uses an interest rate swap to manage interest rate risk. La Coop does not use hedge accounting for this derivative financial instrument. Therefore, gains and losses on these contracts are recognized under financial expenses.

Environmental obligationsEnvironmental costs related to current operations are expensed or capitalized according to their nature. Current costs caused by past events that do not generate future revenues are charged to consolidated earnings in the current year. Liabilities are recorded when costs are likely to be incurred and may be reasonably estimated.

Income taxesLa Coop follows the liability method of accounting for income taxes. Future income tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying value and tax bases of assets and liabilities. Future income tax assets and liabilities are measured using substantively enacted income tax rates applicable in the years in which the temporary differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of future income tax assets, when it is more likely than not that such assets will not be realized.

Year-endLa Coop’s year-end is the last Saturday of October. The year ended October 30, 2010 includes 52 weeks and the year ended October 31, 2009 includes 53 weeks.

1. CHANGES TO ACCOUNTING POLICIES

FUTURE CHANGES TO ACCOUNTING POLICIESIn September 2009, the Accounting Standards Board approved the final accounting standards for private enterprises. This means that private enterprises like La Coop could prepare their financial statements in accordance with Canadian generally accepted accounting principles (“GAAP”) by adopting International Financial Reporting Standards applicable for publicly accountable enterprises or Canadian GAAP for private enterprises. La Coop has elected to adopt the accounting standards for private enterprises, which will initially apply in the fiscal year ending in October 2012.



2. ACQUISITION OF NON-CONTROLLING INTEREST IN SUBSIDIARY On August 2, 2010, La Coop acquired from a group of shareholders a 17.6% non-controlling interest in a subsidiary. The purchase price of $146,880,000 will be paid out in four equal and consecutive annual instalments or sooner, at La Coop’s discretion.

The first 4.4% portion of the 17.6% interest was acquired on that date for a total consideration of $36,720,000. This additional acquisition was accounted for as a step acquisition using the purchase method and the results are consolidated with La Coop’s results since the beginning of fiscal 2010. The final purchase price allocation is summarized as follows:

Net assets acquiredCurrent assets $ 12,721 Property, plant and equipment 25,444 Goodwill 11,781 Other long-lived assets 4,923

Total assets acquired 54,869

Current liabilities 6,362 Long-term debt 1,947 Future income tax liabilities 4,804 Other long-term liabilities 5,036

Total liabilities assumed 18,149

Consideration paidCash $ 36,720

3. OPERATING EXPENSESOperating expenses include the following items: 2010 2009

Cost of inventories $ 3,664,119 $ 3,602,706Amortization of property, plant and equipment 50,144 49,155Amortization of goodwill 2,032 1,731Amortization of other assets 4,048 2,824Amortization of transaction costs 474 454Interest on short-term borrowings 875 3,470Interest on long-term debt 11,322 12,245Interest on preferred shares 646 536Interest income ( 3,236 ) ( 2,022 )

Interest income and expense calculated under the effective interest method are $1,020,000 [$869,000 in 2009] and $13,317,000 [$16,705,000 in 2009], respectively, for financial assets and liabilities using this valuation method.

4. PATRONAGE REFUNDSIn accordance with the provisions of the act governing La Coop, at their meeting on January 13, 2011, the directors declared patronage refunds of $11,500,000 to be paid from earnings for the year. They authorized the refunds to be paid in the following proportions:

2010 2009

Cash $ 2,300 $ 3,000Class B-1 common shares 1,725 3,000Class D-1 common shares 7,475 9,000

$ 11,500 $ 15,000

These consolidated financial statements reflect the directors’ resolution.

5. INCOME TAXESThe significant components of the income tax expense are as follows:

2010 2009

Current $ 5,625 $ 8,834Future 229 1,912

Income taxes $ 5,854 $ 10,746

The reconciliation of income tax expense with the amount obtained from multiplying earnings after patronage refunds by the statutory income tax rates is summarized as follows:

Earnings before patronage refunds and income taxes $ 36,077 $ 53,346Patronage refunds 11,500 15,000

Earnings for the calculation of income tax expense $ 24,577 $ 38,346

Income taxes at combined federal and provincial rates of 30.07% [30.71% in 2009] $ 7,390 $ 11,776Decrease in future income taxes due to a change in rates ( 122 ) ( 519 )Effect of non-deductible expenses for tax purposes 856 461Interests in entities subject to significant influence ( 885 ) ( 1,629 )Other items ( 1,385 ) 657

Income taxes $ 5,854 $ 10,746




5. INCOME TAXES [cont’d]The significant components of future income tax assets and liabilities are as follows:

2010 2009

Non-deductible provisions and reserves for tax purposes $ 3,218 $ 3,190Inventories ( 2,722 ) ( 2,697 )Taxes related to other accumulated comprehensive income 435 188Other items – net ( 273 ) ( 288 )

Current future income tax assets $ 658 $ 393

Excess of carrying amount over tax basis:

Property, plant and equipment $ ( 25,073 ) $ ( 20,470 )Investments ( 1,920 ) ( 1,814 )Other assets ( 1,112 ) ( 328 )Employee future benefits 3,296 3,043Patronage refunds carried forward 843 619

Long-term future income tax liabilities $ ( 23,966 ) $ ( 18,950 )

6. INVENTORIESInventories are as follows:

2010 2009

Marketing inventories $ 137,083 $ 144,886Supply inventories 172,871 148,829

$ 309,954 $ 293,715

The carrying amount of inventories recognized at net realizable value is $171,286,000 [$136,585,000 in 2009].

An inventory write-down of $7,432,000 was recognized as an expense during the year [$17,609,000 in 2009].

A write-down reversal of $8,656,000 [nil in 2009] was netted against the inventory expense for the year.

Marketing inventories are pledged as collateral for long-term debt [note 12].

7. INVESTMENTS 2010 2009

Investments in entities subject to significant influence $ 29,965 $ 29,682

Investments in cooperativesShares and other securities of supply cooperatives 912 904Shares and other securities of affiliated cooperatives 1,257 1,396

2,169 2,300

Mortgage loans and notes receivable 5,760 6,464

37,894 38,446Investments – current portion 1,972 2,064

$ 35,922 $ 36,382



8. PROPERTY, PLANT AND EQUIPMENT Accumulated Net carrying2010 Cost amortization amount

Land $ 23,681 $ –– $ 23,681Pavement 12,478 8,551 3,927Buildings 363,702 150,100 213,602Machinery and equipment 658,402 455,380 203,022Automotive equipment 34,034 25,841 8,193Leasehold improvements 8,663 6,502 2,161

$ 1,100,960 $ 646,374 $ 454,586

Accumulated Net carrying2009 Cost amortization amount

Land $ 23,449 $ –– $ 23,449Pavement 12,280 7,986 4,294Buildings 356,230 140,810 215,420Machinery and equipment 627,845 422,048 205,797Automotive equipment 33,092 24,710 8,382Leasehold improvements 8,589 6,071 2,518

$ 1,061,485 $ 601,625 $ 459,860

In fiscal 2008, La Coop decided to sell the building housing the head office. The net carrying amount of this building as at October 30, 2010 was $21,746,000 [$21,699,000 in 2009] and the related mortgage loan was $11,826,000 [$12,582,000 in 2009].

9. GOODWILL Accumulated Net carrying2010 Cost amortization amount

$ 87,858 $ 19,986 $ 67,872


$ 77,330 $ 17,734 $ 59,596

10. OTHER ASSETSOther assets are as follows:


Trademarks $ 8,417 $ 2,462 $ 5,955Client lists 5,560 3,367 2,193Rights 17,419 6,699 10,720Software 11,951 5,769 6,182Deferred charges 2,200 1,946 254

$ 45,547 $ 20,243 $ 25,304


Trademarks $ 5,419 $ 1,809 $ 3,610Client lists 5,327 2,770 2,557Rights 13,566 6,311 7,255Software 11,063 4,423 6,640Deferred charges 2,297 1,579 718

$ 37,672 $ 16,892 $ 20,780

Software and information technology development projects are internally developed.




11. SHORT-TERM BORROWINGSShort-term borrowings stem from the demand credit facilities of a subsidiary and certain joint ventures.

The subsidiary’s demand credit facility, renewable annually, and drawn under bank overdrafts, advances, letters of credit and standby letters of credit, totalled $12,000,000 in 2010 and 2009, subject to a maximum of $6,000,000 under letters of credit and standby letters of credit. Bank overdrafts as at October 30, 2010 stood at $4,915,000 [$2,070,000 as at October 31, 2009], and bore interest at the prime rate, 3.00% [2.25% as at October 31, 2009]. La Coop is joint and several guarantor for all amounts owing under this agreement.

La Coop’s share of the joint ventures’ demand credit facility at fixed and floating rates, renewable annually, totalled $62,500,000, of which $27,054,000 was drawn as at October 30, 2010 [$62,500,000 as at October 31, 2009, of which $34,674,000 was drawn]. Floating interest rate advances bore interest at the prime rate plus 0.5%, representing an interest rate of 3.50% as at October 30, 2010 [2.75% as at October 31, 2009]. Fixed interest rate advances bore interest equivalent to the cost of funds plus 1.38%, representing an interest rate of 2.84% as at October 30, 2010 [1.99% as at October 31, 2009]. The joint venture credit facility is collateralized by movable hypothecs on all current assets and certain joint venture capital assets. The joint venturer is joint and several guarantor for all amounts owing under comfort letters.

12. LONG-TERM DEBT 2010 2009

Credit facility1 drawn under margin loans at prime rate and under bankers’ acceptances at rates ranging from 2.54% to 3% [1.74% to 2.25% in 2009], renewable in June 2011 $ 111,170 $ 87,942

Term credit, at a fixed rate of 6.29%, repayable in an annual principal instalment of $3,600,000, one instalment of $4,800,000 and three instalments of $7,200,000, from August 2011 through August 2015 30,000 30,000

Unsecured debenture, at a fixed rate of 6.72%, subordinated to the credit facility and repayable in an annual principal instalment of $5,000,000, one instalment of $6,000,000 and two instalments of $7,000,000, from August 2012 through August 2015 25,000 25,000

Term note, at a fixed rate of 7.75%, repayable in blended monthly instalments of $263,621, maturing on January 1, 2018 17,502 19,235

Mortgage loans of the real estate subsidiary, secured by movable and immovable hypothecs, at the fixed rate of 5.55% and the prime rate of 3% as at October 30, 2010 [fixed rate of 5.55% and prime rate of 2.25% in 2009], repayable in monthly principal instalments of $26,153 and $74,860 in 2010, maturing on October 31, 2011 [note 8] 11,826 12,582

Mortgage loan of a subsidiary, secured by a hypothec on a building and land of the subsidiary with a carrying amount of $10,411,000 as at October 30, 2010 [$10,820,000 as at October 31, 2009], at the fixed rate of 7.76% in 2010 and 2009, repayable in blended monthly instalments of $83,404, maturing in March 2023 8,981 9,272

Mortgage loans and other debts, at rates ranging from 4% to 9% [2.25% to 9% in 2009], maturing between November 2010 and June 2019 4,578 4,887

Share of borrowings of joint ventures secured by movable hypothecs at rates ranging from 0.9% to 4% [0.9% to 3.25% en 2009], maturing between January 2011 and May 2017 2,276 2,421

Share of notes payable of a joint venture, secured by the universality of the joint venture’s property, at the rate of 2.99% [3.18% in 2009], maturing between April 2014 and February 2015 936 1,192

212,269 192,531Transaction costs ( 265 ) ( 739 )

212,004 191,792Long-term debt – current portion 133,926 8,343

$ 78,078 $ 183,449

1. La Coop has an overall revolving credit facility of $300,000,000. La Coop can use this credit facility as follows: US- and Canadian-dollar margin loans, bankers’ acceptances, LIBOR advances and letters of gua-rantee. The interest rate is based on a rate schedule that varies according to a financial ratio calculated quarterly on a consolidated basis.

The credit facility, the term credit and the term note, which totalled $158,672,000 as at October 30, 2010 [$137,177,000 as at October 31, 2009], are collateralized by a first rank hypothec over a majority of the tangible and intangible assets, both present and future, of the subsidiary Olymel L.P. and its subsidiaries.

La Coop’s long-term debt is subject to compliance with certain financial ratios based on La Coop’s consolidated financial statements. As at October 30, 2010, La Coop was in compliance with these financial ratios.

The principal repayments required over the next five years are as follows: 2011 – $133,926,000; 2012 – $12,990,000; 2013 – $16,384,000 $; 2014 – $17,336,000; 2015 – $17,286,000.



13. EMPLOYEE FUTURE BENEFITSCash payments for employee future benefits, consisting of cash contributed by La Coop to its funded pension plans, direct cash payments to beneficiaries for its other unfunded benefit plans, and cash contributions to its defined contribution plans, totalled $11,682,000 in 2010 [$11,069,000 in 2009].

La Coop measures its accrued benefit obligations and the fair value of plan assets at each year-end. The most recent actuarial valuations of the pension funds for funding purposes were as of December 31, 2007. The actuarial valuation of the other post-retirement benefit plans was carried out as at October 25, 2008. The next required actuarial valuation will be as at December 31, 2010 for the pension plans and as at October 25, 2011 for the other post-retirement benefit plans.

The total cost for La Coop’s defined contribution plans was $4,114,000 in 2010 [$3,993,000 in 2009].

Information on La Coop’s pension plans and other post-retirement benefits is as follows:

Pension Other post-retirement2010 plans benefits Total

Accrued benefit obligationsBalance, beginning of year $ 124,716 $ 17,746 $ 142,462Current service cost for the year 5,137 974 6,111Interest cost 8,037 1,191 9,228Benefits paid ( 7,351 ) ( 792 ) ( 8,143 )Actuarial losses 23,160 3,414 26,574

Balance, end of year 153,699 22,533 176,232

Plan assetsFair value, beginning of year 115,793 — 115,793Actual return on plan assets 8,067 — 8,067Employer contributions 6,775 792 7,567Employee contributions 543 — 543Benefits paid ( 7,351 ) ( 792 ) ( 8,143 )

Fair value, end of year 123,827 — 123,827

Funded status – plan deficit ( 29,872 ) ( 22,533 ) ( 52,405 )Unamortized net actuarial loss 30,542 3,277 33,819Unamortized past service cost 3,178 ( 204 ) 2,974

Employee future benefit asset (liability) $ 3,848 $ ( 19,460 ) $ ( 15,612 )

The employee future benefit asset (liability) in La Coop’s consolidated balance sheet is presented as follows:

Pension Other post-retirement plans benefits Total

Employee future benefit asset $ 19,289 $ — $ 19,289Employee future benefit liability ( 15,441 ) ( 19,460 ) ( 34,901 )





13. EMPLOYEE FUTURE BENEFITS [cont’d] Pension Other post-retirement2009 plans benefits Total

Accrued benefit obligationsBalance, beginning of year $ 113,234 $ 15,877 $ 129,111Current service cost for the year 4,655 875 5,530Interest cost 7,673 1,109 8,782Benefits paid ( 6,888 ) ( 644 ) ( 7,532 )Plan amendments 1,458 — 1,458Actuarial losses 4,584 529 5,113

Balance, end of year 124,716 17,746 142,462

Plan assetsFair value, beginning of year 102,029 — 102,029Actual return on plan assets 13,672 — 13,672Employer contributions 6,432 644 7,076Employee contributions 548 — 548Benefits paid ( 6,888 ) ( 644 ) ( 7,532 )

Fair value, end of year 115,793 — 115,793

Funded status – plan deficit ( 8,923 ) ( 17,746 ) ( 26,669 )Unamortized net actuarial loss (gain) 8,328 ( 137 ) 8,191Unamortized past service cost 3,796 ( 232 ) 3,564


The employee future benefit asset (liability) in La Coop’s consolidated balance sheet is presented as follows:

Pension Other post-retirement plans benefits Total

Employee future benefit asset $ 17,306 $ — $ 17,306Employee future benefit liability ( 14,105 ) ( 18,115 ) ( 32,220 )


The breakdown of the fair value of La Coop’s pension plan assets is as follows: 2010 2009

Equity securities 67 % 64 %Debt securities 33 36

100 % 100 %



13. EMPLOYEE FUTURE BENEFITS [cont’d]Other post-retirement benefit plans are unfunded. The accrued benefit obligations and fair value of defined benefit plan assets, whose accrued benefit obligations exceed plan assets, amount to $115,042,000 and $81,093,000, respectively [$60,205,000 and $40,100,000 in 2009].

The significant actuarial assumptions used by La Coop are as follows:

2010 2009

Pension Other post-retirement Pension Other post-retirement (as a percentage) plans benefits plans benefits

Accrued benefit obligations Discount rate 5.25 5.25 6.50 6.50Rate of compensation increase 4.00 4.00 4.00 4.00Cost of benefitsDiscount rate 6.50 6.50 6.75 6.75Expected long-term return for plan assets 6.25 n/a 6.25 n/aRate of compensation increase 4.00 4.00 4.00 4.00

For valuation purposes, an 8% annual growth rate in the cost of covered prescription drugs was assumed for the first year in 2008, decreasing by 0.5% annually over the next ten years to remain at 2.5% thereafter, as of 2017. The growth rate in prescription drug costs was 7% as at October 30, 2010 [7.5% in 2009]. The growth rate in other health care costs was 4% as at October 30, 2010 [4% in 2009].

Assumed health care cost rate trends have a significant effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects for:

Increase Decrease

2010 2009 2010 2009

Total of service cost and interest cost $ 234 $ 103 $ ( 214 ) $ ( 93 )Accrued benefit obligations 2,156 789 ( 1,990 ) ( 721 )

La Coop’s net employee future benefit plan cost recognized in consolidated earnings for the year is as follows:

Pension Other post-retirement2010 plans benefits Total

Current service cost for the year, net of employee contributions $ 4,594 $ 974 $ 5,568Interest cost 8,037 1,191 9,228Actual return on plan assets ( 8,067 ) — ( 8,067 )Actuarial losses for the year 23,160 3,414 26,574

Elements of employee future benefit cost before adjustments to recognize the long-term nature thereof 27,724 5,579 33,303

Adjustments to recognize the long-term nature of employee future benefit cost:

Difference between expected return and actual return on plan assets for the year 831 — 831

Difference between actuarial loss recognized for the year and actual actuarial loss on accrued benefit obligation for the year ( 23,045 ) ( 3,414 ) ( 26,459 )

Difference between amortization of past service cost for the year and actual plan amendments for the year 617 ( 27) 590

( 21,597 ) ( 3,441 ) ( 25,038 )

Employee future benefit cost $ 6,127 $ 2,138 $ 8,265




13. EMPLOYEE FUTURE BENEFITS [cont’d] Pension Other post-retirement2009 plans benefits Total

Current service cost for the year, net of employee contributions $ 4,107 $ 875 $ 4,982Interest cost 7,673 1,109 8,782Actual return on plan assets ( 13,672 ) — ( 13,672 )Actuarial losses for the year 4,584 529 5,113

Elements of employee future benefit cost before adjustments to recognize the long-term nature thereof 2,692 2,513 5,205

Adjustments to recognize the long-term nature of employee future benefit cost:

Difference between expected return and actual return on plan assets for the year 7,293 — 7,293

Difference between actuarial loss recognized for the year and actual actuarial loss on accrued benefit obligation for the year ( 4,423 ) ( 543 ) (4,966 )

Difference between amortization of past service cost for the year and actual plan amendments for the year 617 ( 27 ) 590

3,487 ( 570 ) 2,917

Employee future benefit cost $ 6,179 $ 1,943 $ 8,122

14. SHARE CAPITALLa Coop’s share capital is variable and unlimited with regard to the number of shares issu-able. The rights, restrictions and conditions relating to each type of share are determined by the Board of Directors. The share capital consists of:

Preferred sharesClass A preferred shares, with a par value of $1, non-voting and redeemable at their par value upon a decision of the Board of Directors. They are issued upon the conversion of common shares held by a member who does not fulfill the commitments of its contract with La Coop or if the contract commitments are not renewed.

Preferred shares with a par value of $10, issued to members and employees of La Coop in accordance with the Québec Cooperative Investment Plan, bearing interest at a rate determined by the Board of Directors. These shares are redeemable at their par value upon a decision of the Board of Directors. The 2004, 2005, 2008 and 2009 issues are redeemable by La Coop only as of the fifth year following issuance. The 2006 and 2007 issues are redeemable at the option of La Coop as of the fifth year following issuance, or at the holder’s option, provided that certain conditions are met.

Common sharesClass A common shares, with a par value of $25. Holding such shares is an essential con-dition to qualify as a member and obtain voting rights. They are redeemable at their par value upon a decision of the Board of Directors.

Class B common shares, with a par value of $1, non-voting and redeemable at their par value upon a decision of the Board of Directors. However, the Board of Directors cannot redeem Class B common shares if there are shares outstanding other than Class B-1, D-1 common shares or Class A common shares. These shares were issued to members as partial payment of patronage refunds.

Class B-1 common shares, with a par value of $1, non-voting and redeemable at their par value upon a decision of the Board of Directors, starting the day after the fifth an-niversary date of the issuance. However, the Board of Directors may not redeem Class B-1 common shares if there are any outstanding Class B, D and D-1 shares. These shares were issued to members as partial payment of patronage refunds.

Class D common shares, with a par value of $1, non-voting and redeemable at their par value upon a decision of the Board of Directors. These shares were issued to members as partial payment of patronage refunds.

Class D-1 common shares, with a par value of $1, non-voting and redeemable at their par value upon a decision of the Board of Directors, starting the day after the fifth anni-versary date of the issuance. However, the Board of Directors may not redeem Class D-1 common shares if any Class B and D shares are outstanding. These shares were issued to members as partial payment of patronage refunds.

Class auxiliary members common shares, with a par value of $25, non-voting and redeem-able at their par value upon a decision of the Board of Directors.

Class auxiliary federation members common shares, with a par value of $25, non-voting and redeemable at their par value upon a decision of the Board of Directors. This new class of common shares was authorized by La Coop in 2010.



14. SHARE CAPITAL [cont’d]At year-end, the issued and fully paid shares were as follows:

Number Amount 2010 2009 2010 2009

PREFERRED SHARES Class A 1,398,981 1,398,981 $ 1,399 $ 1,399Cooperative Investment Plan

2004 series, redeemable as of 2010, 4.5% –– 350,140 –– 3,501

2005 series, redeemable as of 2011, 4% 396,969 396,969 3,970 3,970

2006 series, redeemable as of 2012, 4.75% 155,853 155,853 1,559 1,559



2009 series, redeemable as of 2015, 4% 359,729 –– 3,597 ––

2,850,313 2,840,724 15,912 15,816Preferred shares recognized as a financial liability ( 860,154 ) ( 813,325 ) ( 8,602 ) ( 8,133 )

1,990,159 2,027,399 $ 7,310 $ 7,683

COMMON SHARESClass A 34,368 33,841 $ 861 $ 847

Class B 39,971,402 39,971,402 39,971 39,971

Class B-1 15,785,154 14,060,194 15,785 14,060

Class D 2,924,165 2,924,165 2,924 2,924

Class D-1 44,537,130 37,062,169 44,537 37,062

auxiliary members 180 180 5 5

auxiliary federation members 100 — 3 —

103,252,499 94,051,951 104,086 94,869

105,242,658 96,079,350 $ 111,396 $ 102,552




14. SHARE CAPITAL [cont’d]This year’s transactions related to share capital were carried out for cash considerations with the exception of patronage refunds paid in the form of shares. These transactions were as follows:

Number Amount 2010 2009 2010 2009

PREFERRED SHARESBalance, beginning of year 2,840,724 1,210,294 $ 15,816 $ 12,103

Issued:Preferred shares, Cooperative Investment Plan 359,729 231,449 3,597 2,314Preferred shares, Class A –– 1,398,981 –– 1,399

359,729 1,630,430 3,597 3,713

Redeemed:Preferred shares, Cooperative Investment Plan ( 350,140 ) –– ( 3,501 ) ––

2,850,313 2,840,724 15,912 15,816Redeemable preferred shares, 2005 series (2004 series in 2009) – current portion ( 396,969 ) ( 350,140 ) ( 3,970 ) ( 3,501 )

Balance, end of year 2,453,344 2,490,584 $ 11,942 $ 12,315

COMMON SHARESBalance, beginning of year 94,051,951 96,439,472 $ 94,869 $ 97,228

Issued:Class A common shares 781 1,795 20 45Patronage refunds paid in Class B-1 common shares 1,725,000 3,000,000 1,725 3,000Patronage refunds paid in Class D-1 common shares 7,475,000 9,000,000 7,475 9,000Class auxiliary members common shares –– 40 –– 1Class auxiliary federation members common shares 100 –– 3 ––

9,200,881 12,001,835 9,223 12,046

Redeemed: Class A common shares ( 254 ) ( 703 ) ( 6 ) ( 18 )Class B common shares –– ( 836,463 ) –– ( 836 )Class B-1 common shares ( 40 ) ( 163,183 ) –– ( 163 )Class D common shares –– ( 12,985,892 ) –– ( 12,986 )Class D-1 common shares ( 39 ) ( 403,115 ) –– ( 402 )

( 333 ) ( 14,389,356 ) ( 6 ) ( 14,405 )

Balance, end of year 103,252,499 94,051,951 $ 104,086 $ 94,869

On September 9, 2010, the directors authorized a preferred share issue pursuant to the Cooperative Investment Plan, 2010 series, as of November 30, 2010, under which 405,309 preferred shares were issued for a cash consideration of $4,053,000. On September 9, 2010, the directors also resolved to repurchase, starting November 30, 2010, 396,969 preferred shares issued under the Cooperative Investment Plan, 2005 series, for a cash consideration of $3,970,000. On January 13, 2011, the directors resolved to repurchase 2,924,165 Class D common shares issued in 2005 and 3,087,321 Class B common shares issued between 1995 and 1997, for a cash consideration of $6,011,486.

On September 9, 2009, the directors authorized a preferred share issue pursuant to the Cooperative Investment Plan, 2009 series, as of November 30, 2009, under which 355,557 preferred shares were issued for a cash consideration of $3,555,000. On September 9, 2009, the directors also resolved to repurchase, starting November 30, 2009, 350,140 preferred shares issued under the Cooperative Investment Plan, 2004 series, for a cash consideration of $3,501,000.



15. ACCUMULATED OTHER COMPREHENSIVE INCOMEAccumulated other comprehensive income includes only financial instruments designated as cash flow hedges. Changes arising during the year were as follows:

2010 2009

Balance, beginning of year $ ( 397 ) $ ( 3,222 )Change in fair value during the year, net of taxes amounting to $197 ($1,329 in 2009) ( 529 ) 2,825

Balance, end of year $ ( 926 ) $ ( 397 )

The total amount of unrealized gains and losses will be reclassified to the consolidated statement of earnings during the following fiscal year.

16. NET CHANGE IN NON-CASH WORKING CAPITAL RELATED TO OPERATIONSThe net change in non-cash working capital related to operations is determined as follows:

2010 2009

Accounts receivable $ ( 32,281 ) $ 22,968 Inventories ( 16,239 ) 99,131 Prepaid expenses ( 12,961 ) ( 3,556 ) Income taxes payable ( 48 ) ( 8,850 ) Accounts payable and accrued liabilities 31,322 ( 62,799 ) Patronage refunds payable ( 700 ) ( 3,000 )

$ ( 30,907 ) $ 43,894

17. COMMITMENTS AND CONTINGENCIES

[a] Operating leasesLa Coop has entered into long-term operating leases for buildings, machinery and automotive equipment. The future minimum lease payments of La Coop under these leases total $36,238,000 and are as follows for the coming years: 2011 – $12,022,000; 2012 – $8,471,000; 2013 – $5,465,000; 2014 – $3,351,000; 2015 – $1,635,000; 2016 and thereafter – $5,294,000.

[b] Repurchase of the shares of non-controlling shareholdersA group of non-controlling shareholders of a subsidiary of La Coop holding 22% of the shares of said subsidiary has, commencing on October 31, 2012, the right to sell all of its shares to La Coop, which is obligated to buy them back. The sale of the shares as well as the payment of their sale price may be made in ten annual instalments according to a predetermined repurchase agreement whose terms and conditions are defined in the partnership agreement of the subsidiary, or sooner, at La Coop’s discretion. This same group of non-controlling shareholders will retain all of its rights until the transfer of the last portion of its shares.

[c] Claims and lawsuitsIn the normal course of business, various claims and lawsuits are brought against La Coop. Legal proceedings are often subject to numerous uncertainties, and it is not possible to predict the outcome of individual cases. In management’s opinion, La Coop has made adequate provision for or has adequate insurance to cover all claims and lawsuits, and their settlement should not have a significant negative impact on La Coop’s financial position.

18. GUARANTEESIn the normal course of business, La Coop has entered into agreements that contain features which meet the definition of a guarantee. These agreements provide for indem-nification and guarantees to counterparties in transactions such as operating leases and security contracts.

These agreements may require La Coop to compensate third parties for costs and losses incurred as a result of various events including breaches of representations and warran-ties, loss of or damages to property, and claims that may arise while providing services.

Notes 11, 12 and 17 to the consolidated financial statements provide information relating to some of these agreements. The following constitutes additional disclosure.

Operating leasesLa Coop and its subsidiaries have general indemnity clauses in most of their mov-able and immovable property leases whereby they, as lessee, agree to indemnify the lessor against liabilities related to the use of the leased property. These leases mature at various dates through February 28, 2027. The nature of the agreements varies based on the contracts and therefore prevents La Coop from estimating the total potential amount it would have to pay to lessors. Historically, La Coop has not made any significant payments under such agreements. Furthermore, La Coop and its subsidiaries have property insurance protecting them against such potential situations.

Guarantee contractsLa Coop is committed under letters of guarantee with financial institutions and insurance companies, in connection with obligations amounting to $28,389,000 as at October 30, 2010.

As at October 30, 2010 and October 31, 2009, no amounts were recognized in respect of the above-mentioned agreements.




19. FINANCIAL INSTRUMENTS

[a] Derivative financial instruments In the normal course of business, La Coop uses a number of derivative financial instruments, such as foreign exchange contracts, currency swaps, commodity forward contracts and interest rate swaps to reduce its exposure to exchange rate, commodity price and interest rate fluctuations. These instruments are used exclusively for risk management purposes.

Foreign exchange contracts and currency swapsThe following table sets out the nominal amounts at the reporting dates with respect to foreign exchange contracts with maturities of less than one year:

Nominal amount in currency [thousands] Average exchange rate

Type 2010 2009

Sale US$63,160 [US$4,205 in 2009] 1.0245 1.1503Purchase US$31,100 [US$53,928 in 2009] 1.0262 1.0761Sale ¥3,055,480 [¥2,564,266 in 2009] 0.012255 0.011679Sale A$20,063 [A$23,013 in 2009] 0.9620 0.9266Sale NZ$2,903 [NZ$1,323 in 2009] 0.7594 0.7771

No amounts have been recognized in the consolidated statement of earnings for ineffective foreign exchange contracts and swaps.

Interest rate swapsIn 2010 and 2009, drawn lines of credit totalling $25,000,000 were subject to interest rate swaps at rates ranging from 3.6% and 3.84%, maturing between June 2011 and May 2013.

Grain forward contractsIn the normal course of business, La Coop has entered into purchase and sale contracts expiring in less than one year with its clients to set various grain prices. As at October 30, 2010, La Coop was committed to buy 90,574 net metric tonnes of grain [to sell 87,343 metric tonnes in 2009] in the amount of $928,000 [$26,742,000 in 2009]. La Coop has recognized a gain of $9,527,000 [a loss of $3,207,000 in 2009] relating to grain price fluctuations in the consolidated statement of earnings. La Coop has sufficient grain in inventory to deliver on these commitments.

La Coop also entered into forward contracts on the price of various grains expiring in less than one year to reduce its exposure to fluctuations in grain prices. As at October 30, 2010, La Coop was committed to sell 293,908 metric tonnes of grain [to buy 23,385 metric tonnes in 2009] in the amount of $72,362,000 [$3,411,000 in 2009]. La Coop recorded a loss of $6,657,000 [a gain of $590,000 in 2009] in the consolidated statement of earnings.

[b] Carrying amount and fair value of financial instrumentsThe carrying amounts and fair values of financial instruments are as follows:

2010 2009

Carrying Fair Carrying Fair amount value amount value

Investments and other assetsLoans and receivables

Mortgage loans and notes receivable $ 5,760 $ 5,760 $ 6,464 $ 6,464Available-for-sale

Investments in cooperatives 2,169 n/a 2,300 n/aDerivatives designated as cash flow hedges

Foreign exchange contracts and currency swaps ( 2,255 ) ( 2,255 ) ( 1,367 ) ( 1,367 ) Interest rate swaps ( 225 ) ( 225 ) ( 645 ) (645 )

Derivatives classified as held-for-tradingCommodity forward contracts 2,870 2,870 (2,613 ) ( 2,613 ) Interest rate swaps ( 488 ) ( 488 ) ( 427 ) ( 427 )

Long-term debtOther financial liabilities

Credit facility $ 111,170 $ 111,170 $ 87,942 $ 87,942Term credit 30,000 31,244 30,000 30,148Unsecured debenture 25,000 26,135 25,000 23,796Term note 17,502 18,409 19,235 19,165Mortgage loans of the real estate subsidiary 11,826 12,544 12,582 12,345Mortgage loan of a subsidiary 8,981 9,042 9,272 9,364Mortgage loans and other debts 4,578 4,578 4,887 4,886Share of borrowings of joint ventures 2,276 2,276 2,421 2,421Share of notes payable of a joint venture 936 936 1,192 1,192

$ 212,269 $ 216,334 $ 192,531 $ 191,259



The maturities of financial liabilities as at October 30, 2010 were as follows:

Less than 1 to 3 4 to 10 More than Net 1 year years years 10 years total

Accounts payable and accrued liabilities $ 396,051 $ –– $ –– $ –– $ 396,051Long-term debt 133,926 46,711 31,367 –– 212,004Derivative financial instruments 2,480 488 –– –– 2,968Letters of guarantee 28,389 –– –– –– 28,389

$ 560,846 $ 47,199 $ 31,367 $ –– $ 639,412

The maturities of financial liabilities as at October 31, 2009 were as follows:

Less than 1 to 3 4 to 10 More than Net 1 year years years 10 years total

Accounts payable and accrued liabilities $ 364,729 $ –– $ –– $ –– $ 364,729Long-term debt 8,343 134,816 48,633 –– 191,792Derivative financial instruments 1,891 645 427 –– 2,963Letters of guarantee 26,248 –– –– –– 26,248

$ 401,211 $ 135,461 $ 49,060 $ –– $ 585,732

19. FINANCIAL INSTRUMENTS [cont’d]

[b] Carrying amount and fair value of financial instruments [cont’d]Fair value measurements are classified in accordance with a hierarchy which reflects the significance of inputs to the measurement of fair value. The fair value measurement hierarchy consists of three levels. In Level 1, inputs consist of quoted prices in active markets for identical assets or liabilities. Under Level 2, inputs comprise quoted prices in active markets for similar assets or liabilities, or valuation techniques whose principal inputs are based on observable market data. In Level 3, inputs used in measuring assets or liabilities are not based on observable market data. La Coop uses a fair value hierarchy consisting of a single level: Level 2. Derivatives designated as cash flow hedges and de-rivatives classified as held-for-trading are recorded in Level 2 of the fair value hierarchy.

The fair value of long-term debt is determined by discounting future contractual cash flows at rates that La Coop could obtain as at the balance sheet date for borrowings under similar terms and conditions and with similar maturities.

The fair value of the derivative financial instruments reflects the estimated amounts La Coop would receive (or pay) to terminate open contracts at year-end. The prices obtained by La Coop’s bankers are compared with closing capital market prices.

The fair value of the preferred shares cannot be established since the timing of these outflows cannot be determined at a reasonable cost.

[c] Nature and extent of risks arising from financial instruments and related risk management

Credit riskCredit risk is the risk of a financial loss for La Coop if one party to a financial instrument is not able to fulfill its obligations.

The maximum exposure to credit risk for La Coop represents to the carrying amount of the following financial instruments:

Loans and receivablesIn the normal course of business, La Coop evaluates the financial position of its clients on a regular basis and examines the credit history of new clients. To protect itself against financial losses related to credit risk, La Coop has a policy that sets out credit conditions for various areas of operations. Specific credit limits are set for each segment and client and reviewed periodically. The allowance for doubtful accounts is based on the client’s specific credit risk and historical trends. Moreover, La Coop holds security on the assets and investments of certain clients in the event of default. La Coop believes the credit risk regarding receivables to be minimal due to the diversification of its clients and their industry segments.

DerivativesCredit risk related to derivative financial instruments is limited to unrealized gains, if any. La Coop is likely to incur losses if parties fail to meet their commitments related to these instruments. However, La Coop views this risk as minimal or non-existent since it deals only with highly rated financial institutions.

Liquidity riskLiquidity risk is the risk that La Coop will find it difficult to meet its obligations related to financial liabilities.

La Coop manages this risk by drawing up detailed financial projections and developing a long-term acquisitions strategy. Treasury management at the consolidated level requires constant monitoring of expected cash inflows and outflows based on La Coop’s consoli-dated financial projections. Liquidity risk is evaluated using historical volatility, seasonal needs, current financial obligations and long-term debt obligations.





[c] Nature and extent of risks arising from financial instruments and related risk management [cont’d]

Market risk

Foreign exchange riskLa Coop often makes purchases and sales abroad. La Coop’s policy is to maintain the purchase costs and selling prices of its business transactions by hedging its positions using derivative financial instruments. To manage foreign exchange risk, La Coop uses foreign exchange contracts and currency swaps.

La Coop’s main foreign exchange risks are covered by a centralized treasury department. Foreign exchange risk is managed in accordance with the foreign exchange risk man-agement policy. The policy aims to protect La Coop’s operating earnings by eliminating the exposure to currency fluctuations. The foreign exchange risk management policy prohibits speculative transactions.

As at October 30, 2010, foreign exchange contracts used by La Coop for hedging cash flows had a negative fair value of $2,255,000 [negative fair value of $1,367,000 in 2009]. All of La Coop’s foreign exchange forward contracts are considered effective hedges. As a result, a 1% increase or decrease in exchange rates between currencies used in La Coop’s transactions as at October 30, 2010 would not have had a considerable impact on its consolidated net earnings. Fluctuations in exchange rates would have had an impact on the fair value of foreign exchange forward contracts reported in accumulated other comprehensive income. The sensitivity to exchange rates represents the exposure of La Coop’s financial instruments to foreign exchange risk.

As at October 30, 2010 and October 31, 2009, a 1% increase or decrease in exchange rates would have had the following impact on accumulated other comprehensive income pres ented under equity, assuming that all other variables remained unchanged:

Increase Decrease Increase Decrease

2010 2010 2009 2009

Impact of changes in the fair value of derivatives on other comprehensive income

C$/US$ $ 267 $ ( 267 ) $ 122 $ ( 122 )C$/¥ ( 387 ) 387 ( 308 ) 308C$/A$ ( 202 ) 202 ( 224 ) 224C$/NZ$ ( 23 ) 23 ( 10 ) 10

Interest rate riskInterest rate risk relating to financial assets and liabilities results from changes in interest rates that La Coop may experience. La Coop believes that mortgage loans and notes receivable, bank overdrafts, short-term borrowings and variable-rate long-term debt give rise to a cash flow risk, as they could have a negative impact on La Coop in the event of changes in interest rates.

Centralized treasury management aims to match and bring about an appropriate combination of fixed- and variable-rate borrowings to minimize the impact of interest rate fluctuations. La Coop uses derivative financial instruments, namely interest rate swaps. La Coop held interest rate swaps in the amount of $25,000,000 in 2010 and 2009 for cash flow management purposes.

As at October 30, 2010 and October 31, 2009, a 100 basis point increase or decrease in the interest rate curve would have had the following impact on net earnings and on accumulated other comprehensive income presented under equity, assuming that all other variables remained unchanged:

Increase Decrease Increase Decrease

2010 2010 2009 2009

Impact on net earnings of a change in interest rates on other variable-rate financial liabilities $ (46 ) $ 46 $ (21 ) $ 21

Impact on net earnings of a change in interest rates resulting in a change in the fair value of non-designated hedges 244 (244 ) 337 (337 )

Impact on other comprehensive income of a change in the fair value of derivatives designated as cash flow hedges 88 (88 ) 235 (235 )

Other price risks

Input price fluctuation risksInput prices vary depending on several external factors while extreme price volatility stems from continually changing supply markets. La Coop often buys and sells grain. La Coop’s policy is to maintain the purchase costs and selling prices of its business transactions by hedging its positions using derivative financial instruments. To manage exposure to changes in commodity prices, La Coop uses forward contracts.




[c] Nature and extent of risks arising from financial instruments and related risk management [cont’d]

Other price risks [cont’d]

Input price fluctuation risks [cont’d]As at October 30, 2010, La Coop’s commodity forward contracts have a fair value of $2,870,000 (negative value of $2,613,000 as at October 31, 2009). All contracts used by La Coop are considered effective hedges but are not documented for hedge accounting purposes. As a result, a 1% increase in commodity prices, assuming all other variables remained unchanged, would have decreased La Coop’s consolidated net earnings by $123,000 [$44,000 as at October 31, 2009]. Conversely, a 1% decrease in commodity prices, assuming all other variables remained unchanged, would have increased La Coop’s consolidated net earnings by $123,000 [$44,000 as at October 31, 2009].

20. CAPITAL MANAGEMENTFor financing purposes, La Coop must comply with a financial ratio related to its capital structure, namely the Funded Debt-to-Capitalization ratio. Issuance of preferred shares to employees under the Cooperative Investment Plan is one of La Coop’s financing tools to achieve its capitalization targets.

During fiscal 2010 and 2009, La Coop was in compliance with this financial ratio, which has to be lower than 50% as per the agreement. The ratio is calculated quarterly in accordance with the agreement, and stood at 33.1% as at October 30, 2010 (32.1% as at October 31, 2009).

Pursuant to regulations adopted under the Cooperatives Act, La Coop must also distribute its earnings in the form of patronage refunds. Patronage refunds made to members are prorated according to the transactions carried out by each member. The amount and payment method for patronage refunds and the redemption of shares issued are authorized by La Coop every year. Furthermore, under this law with which La Coop has complied, it cannot redeem or repurchase shares if such redemption or repurchase compromises its financial stability.

21. INTEREST IN JOINT VENTURESLa Coop’s consolidated financial statements include its share of the results, financial position and cash flows of its joint ventures, as follows:

2010 2009

Consolidated statement of earningsRevenues $ 272,047 $ 269,492Operating expenses 266,125 268,269Net earnings 5,922 1,223

Consolidated balance sheetCurrent assets 98,117 95,263Long-term assets 27,582 25,792Current liabilities 76,025 72,596Long-term liabilities 14,671 19,566

Consolidated statement of cash flowsCash flows related to:

Operating activities 13,961 9,177Investing activities ( 5,237 ) ( 2,959 )Financing activities ( 9,425 ) ( 15,321 )




22. SEGMENTED INFORMATIONLa Coop has two reportable segments: Marketing and Supply Operations. Shared costs and operations related to the head office building are combined under Other Segments. These segments are managed separately since they require specific business strategies. All of La Coop’s assets are located in Canada.

The various segments’ accounting policies are the same as those described under significant accounting policies. La Coop evaluates performance based on earnings before patronage refunds and income taxes. La Coop accounts for its intersegment revenues and transfers at the exchange amount. The geographical breakdown of revenues is based on the clients’ billing location.

Supply Other 2010 Marketing Operations segments Consolidated

REPORTABLE SEGMENTSThird-party revenues $ 2,160,306 $ 1,787,565 $ –– $ 3,947,871Intersegment transfers 4 17,118 –– 17,122

Total revenues 2,160,310 1,804,683 –– 3,964,993

Financial expenses 8,992 1,063 28 10,083

Amortization of property, plant and equipment and other assets 38,563 15,557 2,104 56,224

Share of results of entities subject to significant influence –– 2,943 ( 9 ) 2,934

Earnings before patronage refunds and income taxes 7,309 47,719 ( 18,951 ) 36,077

Segment assets 658,148 587,413 45,676 1,291,237

Goodwill 30,960 16,651 20,261 67,872

Investments in entities subject to significant influence –– 30,067 ( 102 ) 29,965

Additions to property, plant and equipment 23,984 9,528 941 34,453

Supply Other 2009 Marketing Operations segments Consolidated

REPORTABLE SEGMENTSThird-party revenues $ 2,092,849 $ 1,827,114 $ –– $ 3,919,963Intersegment transfers 12 17,591 –– 17,603

Total revenues 2,092,861 1,844,705 –– 3,937,566

Financial expenses 8,611 5,799 273 14,683

Amortization of property, plant and equipment and other assets 38,019 14,051 1,640 53,710

Share of results of entities subject to significant influence –– 5,305 ( 4 ) 5,301

Earnings before patronage refunds and income taxes 20,631 51,010 ( 18,295 ) 53,346

Segment assets 652,939 523,986 44,591 1,221,516

Goodwill 30,960 17,684 10,952 59,596

Investments in entities subject to significant influence –– 29,776 ( 94 ) 29,682

Additions to property, plant and equipment 27,270 16,945 2,165 46,380

Revenues by geographical area 2010 2009

Third-party revenues in Canada $ 3,125,101 $ 3,129,687

Third-party revenues outside Canada:United States 298,889 266,361Japan 205,171 223,935Russia 62,470 35,071Other 256,240 264,909

822,770 790,276

Total third-party revenues $ 3,947,871 $ 3,919,963

23. RESTRUCTURING COSTSRestructuring costs consist of costs arising from operating commitments and maintenance costs regarding facilities involved in the 2006 restructuring of Olymel’s pork processing and marketing operations. The balance of restructuring costs charged to accounts payable and accrued liabilities amounted to $2,524,000 as at October 30, 2010 [$2,794,000 in 2009]. Changes in the provision for restructuring costs in fiscal 2010 are as follows:

Balance as at October 31, 2009 $ 2,794Expenditures (270 )

Balance as at October 30, 2010 $ 2,524



24. BUSINESS ACQUISITIONOn December 31, 2008, La Coop acquired all the shares of a company operating in Supply Operations for a total consideration of $56,202,000. This consideration is subject to a purchase price adjustment based on the operating results of the acquired company for its fiscal year ended December 31, 2008. This acquisition was accounted for using the purchase method and consolidated since the acquisition date. The preliminary purchase price allocation is summarized as follows:

Net assets acquiredCurrent assets $ 153,460Future income tax assets 888Property, plant and equipment 17,929Goodwill 17,957Other long-lived assets 1,498

Total assets acquired 191,732

Current liabilities 133,092Long-term debt 1,743Other long-term liabilities 695

Total liabilities assumed 135,530

Consideration paidCash $ 56,202

Negotiations are currently underway to finalize the purchase price. When a final agreement is reached with the vendors, any adjustments to the purchase price will be disclosed to reflect the consideration paid and the final allocation of actual net assets acquired.

25. COMPARATIVE FIGURESCertain 2009 figures have been reclassified to conform to the presentation adopted in 2010.


Financial Review

UNAUDITED 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001

Operations [in thousands of dollars]

Revenues $ 3,947,871 $ 3,919,963 $ 3,606,101 $ 3,286,795 $ 3,175,705 $ 3,141,860 $ 2,908,842 $ 2,755,096 $ 2,480,291 $ 2,431,329

Financial expenses 10,083 14,683 14,976 20,604 18,717 12,965 9,925 12,714 11,364 15,504

Amortization 56,224 53,710 49,403 49,522 53,197 41,969 36,165 38,100 34,521 29,768

Earnings (loss) from continuing operations 36,077 53,346 70,992 40,587 ( 21,599 ) 42,463 35,456 26,136 42,481 62,690

Patronage refunds 11,500 15,000 30,000 10,000 — 8,500 12,000 8,203 17,200 16,200

Income taxes 5,854 10,746 10,602 7,770 ( 11,408 ) 1,551 7,887 4,348 8,222 8,617

Discontinued operations — — — — — — — — — ( 161 )

Net earnings (loss) 18,723 27,600 30,390 22,817 ( 10,191 ) 32,412 15,569 13,585 17,059 37,712

Financial position [in thousands of dollars]

Working capital $ 92,898 $ 191,178 $ 181,421 $ 43,846 $ 164,721 $ 197,750 $ 139,486 $ 127,981 $ 123,742 $ 122,390

Property, plant and equipment, net book value 454,586 459,860 445,157 428,953 442,865 451,177 305,328 309,145 309,477 287,269

Total assets 1,291,237 1,221,516 1,143,503 1,014,948 1,004,006 1,058,252 808,765 762,288 769,788 721,081

Convertible debentures, preferred shares and equity** 440,518 412,482 383,528 338,754 305,890 321,928 284,711 261,689 283,163 258,461

Financial ratios

Working capital ratio 1.2 1.4 1.4 1.1 1.6 1.7 1.5 1.5 1.5 1.5

Interest coverage 4.6 4.6 5.7 3.0 ( 0.2 ) 4.3 4.6 3.1 4.7 5.0

Debt/equity ratio* ** 36:64 36:64 33:67 41:59 49:51 47:53 40:60 45:55 50:50 51:49

Earnings (loss) before patronage refunds and income taxes/revenues 0.9% 1.4% 2.0% 1.2% ( 0.7 )% 1.4% 1.2% 0.9% 1.7% 2.6%

Reserve/convertible debentures, preferred shares and equity** 72.8% 73.2% 71.5% 72.0% 72.2% 71.8% 69.8% 70.0% 59.9% 59.0%

Convertible debentures, preferred shares and equity**/total assets** 34.1% 33.8% 33.5% 33.4% 30.5% 30.4% 35.2% 34.3% 36.8% 35.8%

Number of employees 10,429 11,336 11,175 11,072 11,895 12,287 9,587 9,644 10,096 9,340

* The debt figure in the Debt/Equity ratio includes the convertible debentures and the equity figure includes the preferred shares.** Accumulated other comprehensive income as well as the related financial instruments have been excluded from the ratio calculations.


List of locations

SUPPLY OPERATIONSLa Coop fédérée9001 de l’Acadie BoulevardMontréal, Québec H4N 3H7

Animal production sector

Feedmills and warehouses JolietteLévisNew Liskeard, OntarioSt-Isidore de Prescott, Ontario

Micro premix plantLévis

Sogeporc genetic hog farms LauriervilleNotre-Dame-de-Lourdes Saint-ApollinaireSaint-RomainSaint-Narcisse-de-RimouskiTrinité-des-MontsLa Rédemption

Research farmsFrampton (farrowing barn) Saint-Jean-Baptiste-de-Rouville (broilers and layers) Saint-Hermas-de-Mirabel (nursery and finishing barn) Adstock (gilt)

HatcheryVictoriaville

Breeding farms (poultry)Saint-JudeWickhamVictoriaville

Breeding farms (broiler breeders)Lanoraie Saint-Germain-de-GranthamSaint-Jean-Baptiste-de-RouvilleSaint-Lin-LaurentidesWickham

Agro-alimentary laboratoryLongueuil

Crop production sector

OfficeMontréal

Research farmSaint-Hyacinthe

Distribution centres LongueuilSainte-CatherineSillery

Companies6 Agrocentres (50%)Fertichem (50%)SQS inc.Agronomy Company of Canada Ltd

Seed laboratory Longueuil

Grains and feedmill supply sector

OfficesMontréalSillery

Joint venture enterpriseSillery Distribution Centre Inc. (50%)

SubsidiaryElite Grain Inc., Napierville

Petroleum sectorSales and customer support officesBrossardDrummondvilleMontréalPointe-aux-TremblesRivière-du-LoupSaint-HyacintheSaint-RomualdTrois-Rivières

78 distribution agents8 bulk stations185 service stations Joint venture enterpriseGroupe pétrolier Norcan inc. (33%)

Hardware and farm machinery sector

Distribution centreTrois-Rivières

Sales outlets181 hardware and renovation centres (La Coop or Unimat)28 Plus Vert garden centres 16 industrial clients 175 farm machinery and forestry dealers200 agricultural parts dealers40 Inov decoration centers9 training stores

Cooperative member services and Coop agricultural centre

OfficeMontréal

Coop agricultural centre The Coop AgriEst, St.Isidore de Prescott and St.Albert, Ontario

MARKETING OPERATIONSOlymel L.P.2200 Pratte Avenue, Suite 400Saint-Hyacinthe, Québec J2S 4B6

Sales officesBouchervilleRed Dear, AlbertaToronto, OntarioSydney, AustraliaSeoul, South KoreaTokyo, Japan

Distribution centres BouchervilleRed Deer, AlbertaSaint-Jean-sur-RichelieuToronto, Ontario

Hog sectorSlaughterhouses and cutting plants PrincevilleRed Deer, AlbertaSaint-EspritSaint-HyacintheVallée-Jonction

Processing plantsAnjou Cornwall, OntarioDrummondvillePrincevilleSaint-Henri de BellechasseTrois-Rivières

Poultry sector

Slaughterhouses and cutting plantsBerthiervilleSaint-Damase

Processing plantsToronto, OntarioSaint-HyacintheSaint-Jean-sur-Richelieu (2)

Joint venture enterprisesSunnymel GP Inc.Unidindon Inc.Volaille Giannone Inc.

Other operationsTransport Transbo Inc.Machinerie Olymel (1998) Inc.Transbo exportation Inc.


Affiliated cooperatives

Citadelle, coopérative de producteurs de sirop d’érablePlessisville

Coopérative agricole du TémiscouataNotre-Dame-du-Lac

Coopérative de consommation de Saint-AlexisSaint-Alexis-de-Matapédia

Coopérative de Saint-Quentin ltéeSaint-Quentin (New Brunswick)

Groupe Dynaco, coopérative agroalimentaireLa Pocatière

La Coop AgrilaitSaint-Guillaume

La Coop AgriscarTrois-Pistoles

La Coop AgrivertSaint-Barthélemy

La Coop AgrivoixLa Malbaie

La Coop AgrodorThurso

La Coop AllianceSaint-Ephrem-Station

La Coop Baie des ChaleursCaplan

La Coop ChambordChambord

La Coop ComaxSaint-Hyacinthe

La Coop ComptonCompton

La Coop CoopPlusSaint-Narcisse

La Coop CovilacBaie-du-Febvre

La Coop de l’AssomptionL’Assomption

La Coop des AppalachesLaurierville

La Coop des Bois-FrancsVictoriaville

La Coop des CantonsCoaticook

La Coop des deux rivesNormandin

La Coop des FrontièresSainte-Martine

La Coop Dupuy et Ste-Jeanne d’ArcDupuy

La Coop ExcelGranby

La Coop Fermes du NordMont-Tremblant

La Coop FramptonFrampton

La Coop GracefieldGracefield

La Coop Grains D’OrMétabetchouan–Lac-à-la-Croix

La Coop Ham NordHam-Nord

La Coop Île-aux-GruesSaint-Antoine-de-l’Isle-aux-Grues

La Coop JonquièreJonquière

La Coop La PatrieLa Patrie

La Coop Lac-Mégantic LambtonLac-Mégantic

La Coop LangevinSainte-Justine

La Coop MatapédienneAmqui

La Coop MontmagnyMontmagny

La Coop NominingueLac Nominingue

La Coop ParisvilleParisville

La Coop Pont-RougePont-Rouge

La Coop Pré-VertTingwick

La Coop Profid’OrJoliette

La Coop PurdelLe Bic

La Coop Rivière-du-SudSaint-François-de-la-Rivière-du-Sud

La Coop Saint-Alexandre- de-KamouraskaSaint-Alexandre-de-Kamouraska

La Coop Saint-DamaseSaint-Damase

La Coop Sainte-HélèneSainte-Hélène-de-Bagot

La Coop Sainte-JulieSainte-Julie

La Coop Saint-HubertSaint-Hubert-de-Rivière-du-Loup

La Coop Saint-UbaldSaint-Ubalde

La Coop SeigneurieSaint-Narcisse-de-Beaurivage

La Coop SquatecSquatec

La Coop St-André d’ActonActon Vale

La Coop St-CasimirSaint-Casimir

La Coop St-Côme-LinièreSaint-Côme-Linière

La Coop Ste-CatherineSainte-Catherine-de-la-Jacques-Cartier

La Coop Ste-JustineSainte-Justine

La Coop Ste-MartheSainte-Marthe

La Coop St-FabienSaint-Fabien

La Coop St-Isidore d’AucklandSaint-Isidore-de-Clifton

La Coop St-Jacques-de-LeedsSaint-Jacques-de-Leeds La Coop St-MéthodeAdstock

La Coop St-PamphileSaint-Pamphile

La Coop St-PatriceSaint-Patrice-de-Beaurivage

La Coop UnicoopSainte-Hénédine

La Coop UniforceNapierville

La Coop Val-NordLa Sarre

La Coop VerchèresVerchères

La Coop WeedonWeedon

La Coopérative Cartier LtéeRichibucto (New Brunswick)

La Coopérative de Baie Ste-Anne LtéeBaie Sainte-Anne (New Brunswick)

La Coopérative de Caraquet LtéeCaraquet (New Brunswick)

La Coopérative de Rogersville LtéeRogersville (New Brunswick)

La Coopérative de Saint-Louis LtéeSaint-Louis-de-Kent (New Brunswick)

La Fromagerie coopérative St-Albert inc.St. Albert (Ontario)

Magasin CO-OP de Havre-aux-MaisonsHavre-aux-Maisons

Magasin CO-OP de PlessisvillePlessisville

Magasin CO-OP de Saint-LudgerSaint-Ludger

Magasin CO-OP de Ste-PerpétueSainte-Perpétue-de-l’Islet

Magasin CO-OP de St-SamuelLac-Drolet

Magasin CO-OP de St-VictorSaint-Victor

Magasin coop St-GédéonSaint-Gédéon-de-Beauce

Nutrinor, coopérative agro-alimentaire du Saguenay Lac St-JeanSaint-Bruno

Société coopérative agricole de Saint-Adrien-d’IrlandeSaint-Adrien-d’Irlande

Société coopérative agricole de Lamèque LtéeLamèque (New Brunswick)

Auxiliary members

Coopérative des producteurs de pommes de terre de Péribonka- Ste-Marguerite-MariePéribonka

Coopérative d’utilisation de machinerie agricole de la Rivière du BicRimouski (Le Bic)

Coopérative d’utilisation de machinerie agricole de LauriervilleLaurierville

Coopérative d’utilisation de machinerie agricole de l’ÉrablePlessisville

Coopérative d’utilisation de machinerie agricole de l’Or BlancSaint-Georges-de-Windsor

Coopérative d’utilisation de machinerie agricole de Saint-FabienSaint-Fabien

Coopérative d’utilisation de machinerie agricole de St-CyprienSaint-Cyprien

Coopérative d’utilisation de machinerie agricole de Ste-Croix, St-ÉdouardSaint-Édouard-de-Lotbinière

Coopérative d’utilisation de machinerie agricole des RivièresSte-Anne-de-la-Pérade

Coopérative d’utilisation de machinerie agricole Estrie-MontSaint-Joachim-de-Shefford

Coopérative d’utilisation de machinerie agricole et forestière du LacAlma

Coopérative d’utilisation de machinerie agricole Franco-AgriSte-Anne-de-Prescott(Ontario)

Coopérative d’utilisation de machinerie agricole JeannoiseSaint-Gédéon

Coopérative d’utilisation de matériel agricole de la Petite-Nation et de la LièvrePlaisance

Coopérative d’utilisation de matériel agricole de LeclercvilleLeclercville

Coopérative d’utilisation de matériel agricole de St-SylvèreDeschaillons

Coopérative d’utilisation de matériel agricole des AulnaiesSaint-Jean-Port-Joli

Coopérative d’utilisation de matériel agricole l’Oie BlancheSaint-Pierre

Co-op AtlantiqueMoncton (New Brunswick)

Coopérative d’utilisation de machinerie agricole du SaguenayChicoutimi

OUR ORGANIZATION

CONTENTS

credit

La Coop fédérée contributes to the economic, social and environmental development of cooperative agricultural producers and its affiliated cooperatives by:

Developing an integrated cooperative network owned and operated by member agricultural producers to supply professional use products and services;

Operating a network of complementary businesses controlled by them that generate competitive earnings, primarily in the hardware, energy and meat processing sectors;

Enabling member produ-cers to join together in democratically coordinating the value added production chain they are part of;

Promoting cooperative education and bringing cooperative values to life.

4 President’sMessage 14 CooperativeOverview 20 ManagementDiscussionandAnalysis 36 OlymelOverview 42 ManagementReport 43 Auditors’Report 44 ConsolidatedBalanceSheet

45 ConsolidatedStatementofEarningsandReserve 45 ConsolidatedStatementofComprehensiveIncome 46 ConsolidatedStatementofCashFlows 47 NotestoConsolidatedFinancialStatements 67 FinancialReview 68 ListofLocations 69 AffiliatedCooperatives

Head OfficeLa Coop fédérée

9001 de l’Acadie BlvdSuite 200

Montréal, Québec H4N 3H7

Telephone: 514 384-6450

Fax: 514 858-2119

Websitewww.lacoop.coop

On peut obtenir la version française de ce rapport sur le site Internet de La Coop

fédérée à l’adresse www.lacoop.coop ou obtenir une copie imprimée

en communiquant avec le Service des communications au 514 384-6450.

Artistic Director/Graphic DesignerBernard Diamant

InfographiePierre Cadoret

Service de créationLa Coop fédérée

Photo Credits Martine Doyon, Photographer (www.martinedoyon.com) Valérie Laliberté, Assistant

Colour Separation and Printing Imprimerie Mont-Roy

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