Weekly Update Monday, April 21, 2014 S&P 500’S Weekly Gain Is Best Since July 2013 Mary Burke U.S

Weekly Update Monday, April 21, 2014 S&P 500’s Weekly Gain Is Best Since July 2013 Mary Burke U.S. stocks ended the holiday-shortened week with solid Principal 312.348.7081 gains, after four straight days of increases on the S&P 500 index [email protected] and NASDAQ Composite.

William Whipple The Dow Jones Industrial Average gained 1.5% on the week, Principal finishing at 16,409. 312.348.7076 [email protected] The S&P 500 grew 1.7% on the week, finishing at 1,865. Philip Zoloto The NASDAQ Composite rose 1.0% on the week, finishing at Principal 312.348.7077 4,096 (down 20.2% from its all-time high of 5,133). [email protected]

Yield on the 10-year Treasury rose ten basis points, closing at

2.73%. Lakeshore Food Advisors, LLC 20 North Wacker Drive Crude oil increased 0.7% on the week, ending at $103.37 per Suite 1701 barrel. Chicago, IL 60606

Corn futures decreased 0.8% on the week, ending at $5.00 per bushel.

NASDAQ Highs: Anderson’s, BioFuel Energy, Pilgrim’s Pride, Sanderson Farms, SunOpta Lows: Village Super Market

NYSE Highs: Archer Daniels Midland Lows: None

Featured Stocks of the Week: The Andersons (ANDE) 10-year History SunOpta (STKL) 10-year History 70 16

60 14

12 50 10 40 8 30 6 20 4

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0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

The Lakeshore Food Chain Price Price as Compared to Enterprise Value to Total Debt Price Compared to 52-Week Range YE: Forward LTM: to LTM Company Name 4/17/14 4/10/14 High Low 2013 2012 P/E Revenue EBITDA EBITDA Dow Jones Industrial Average 16,409 1.5% 16,577 14,537 (1.0%) 25.2% S&P 500 Index 1,865 1.7% 1,891 1,542 0.9% 30.8% NASDAQ Composite Index 4,096 1.0% 4,358 3,166 (1.9%) 35.6% Sector Average: (0.7%) 30.5% 16408.53 INPUTS *Agrium Inc. $102.56 1.3% $108.28 $83.46 5.5% 3.4% 12.7x 1.08x 8.3x 2.0x American Vanguard Corp. 20.64 0.8% 32.34 19.32 (15.0%) (33.6%) 23.2 1.68 8.6 0.7 CF Industries Holdings, Inc. 242.34 (1.4%) 267.76 169.33 4.0% 19.3% 12.4 2.68 5.2 1.1 Intrepid Potash, Inc. 15.11 4.7% 19.51 10.60 (4.6%) (29.0%) 152.5 4.36 12.7 1.5 Monsanto Company 112.95 0.4% 117.50 94.00 (3.1%) 19.3% 21.6 3.80 12.8 0.7 The Mosaic Company 48.72 1.3% 64.65 39.75 3.1% (14.0%) 17.2 2.10 10.2 1.8 * Potash Corp. of Saskatchewan, Inc. 38.45 4.4% 45.13 29.67 9.8% (5.0%) 21.1 5.07 10.9 1.3 Rentech Nitrogen Partners, L.P. 18.12 (3.1%) 37.46 16.90 3.0% (51.9%) 9.5 3.18 15.4 5.0 S&W Seed Company 7.43 (4.6%) 9.91 4.82 6.9% (3.8%) 56.3 2.43 NM NM *Syngenta AG 348.50 3.5% 400.90 302.10 (1.9%) (4.9%) 18.6 2.60 13.2 1.1 Zoetis Inc. 28.60 (0.9%) 34.74 28.14 (12.5%) NA 18.7 3.81 13.8 2.9 Sector Average: 0.8% (10.0%) 33.2x 2.45x 11.0x 1.8x

AGRICULTURAL EQUIPMENT *Ag Growth International Inc. $45.98 (0.6%) $41.55 $30.01 3.0% 46.6% 15.7x 1.99x 12.0x 3.7x AGCO Corporation 56.63 1.9% 64.60 47.76 (4.3%) 15.3% 10.3 0.52 4.6 1.1 Art's-Way Manufacturing Co. Inc. 5.87 (6.1%) 8.44 5.40 (3.6%) 4.1% 15.1 1.08 22.7 7.2 * Buhler Industries Inc. 5.86 (5.5%) 7.30 5.30 (17.5%) 3.2% NA 0.51 5.5 0.8 CNH Industrial N.V. 8.11 (0.4%) 9.86 7.33 (2.1%) NA 10.2 1.09 8.5 6.8 Deere & Company 93.40 0.7% 94.59 79.50 2.3% 8.1% 11.4 1.72 10.0 5.3 Lindsay Corporation 88.48 (0.1%) 92.93 71.13 6.9% 10.4% 20.6 1.45 9.2 0.0 Titan Machinery, Inc. 18.14 0.0% 24.00 14.19 1.8% (26.6%) 21.9 0.58 14.7 11.2 Sector Average: (1.7%) 8.7% 14.9x 0.99x 8.3x 3.4x

AGRIBUSINESS The Andersons, Inc. $63.04 4.7% $63.35 $33.52 6.0% 120.4% 15.3x 0.34x 8.9x 3.0x Archer Daniels Midland Company 45.04 2.0% 45.34 31.69 3.8% 64.4% 14.1 0.37 9.5 2.3 Bunge Limited 80.25 1.1% 84.18 65.98 (2.3%) 10.4% 11.5 0.27 9.2 5.1 Darling International Inc. 20.83 0.1% 23.95 16.35 (0.2%) 29.9% 16.0 2.00 11.5 3.0 * Gruma S.A.B. de CV 107.41 (1.4%) 113.40 51.65 8.7% 174.2% 17.6 1.16 9.6 2.5 Ingredion Incorporated 68.18 1.0% 74.00 58.28 (0.4%) 5.8% 12.3 1.00 7.9 2.2 Landec Corp. 12.12 4.3% 15.96 9.84 0.0% 27.4% 16.4 0.75 13.4 1.4 * Olam International Limited 2.23 (0.4%) 2.24 1.41 45.3% 43.4% 12.2 0.67 11.5 8.0 Omega Protein Corporation 12.09 (0.2%) 15.27 8.30 (1.6%) 97.5% 11.5 0.99 3.2 0.3 Sector Average: 6.6% 63.7% 14.1x 0.69x 9.7x 2.8x

DIVERSIFIED FOODS Annie's, Inc. $36.43 0.9% $52.38 $34.90 (15.4%) 9.0% 36.3x 3.14x 23.6x 0.0x B&G Foods Inc. 31.18 (1.5%) 37.66 27.35 (8.1%) 10.1% 18.5 3.37 13.9 4.8 Campbell Soup Company 44.54 (0.3%) 48.83 38.30 2.9% 27.7% 17.1 2.20 12.9 3.0 ConAgra Foods, Inc. 31.34 2.3% 37.28 28.09 (7.0%) 6.2% 13.6 1.26 9.7 4.1 General Mills, Inc. 52.09 2.1% 53.07 46.18 4.4% 28.9% 17.0 2.30 11.6 2.6 The Hain Celestial Group, Inc. 86.83 0.8% 98.83 59.87 (4.4%) 60.1% 25.4 2.53 18.9 2.4 The J. M. Smucker Company 96.70 1.3% 114.72 87.10 (6.7%) 12.1% 16.7 2.08 9.7 1.7 Kellogg Company 66.34 1.1% 67.98 55.69 8.6% 18.8% 16.6 2.09 8.4 2.0 Kraft Foods Group, Inc. 56.91 1.8% 58.76 49.79 5.6% 25.2% 17.7 2.32 8.0 1.9 Lancaster Colony Corporation 95.20 (0.1%) 99.73 70.29 8.0% 37.6% 22.3 2.07 13.0 0.0 Mondelez International, Inc. 34.65 (0.2%) 36.05 28.22 (1.8%) 36.1% 20.3 2.08 13.1 3.1 * Nestlé S.A. 67.25 (1.4%) 69.35 59.20 3.0% 12.8% 19.3 2.50 12.4 1.3 Pinnacle Foods Inc. 29.94 0.6% 30.09 23.37 9.0% NA 17.2 2.39 13.9 5.9 Post Holdings, Inc. 54.25 5.7% 60.63 38.31 10.1% 58.4% 55.9 2.83 15.0 9.4 SunOpta Inc. 12.77 1.4% 13.49 6.99 20.2% 128.0% 26.8 0.84 16.6 3.2 * Treehouse Foods, Inc. 72.15 1.3% 76.72 62.53 4.7% 38.4% 20.1 1.53 11.8 3.2 Unilever NV 30.54 (0.1%) 33.09 26.97 4.3% 5.9% 19.0 1.93 11.3 1.4 Sector Average: 2.2% 32.2% 21.2x 2.15x 11.5x 2.9x

Price Price as Compared to Enterprise Value to Total Debt Price Compared to 52-Week Range YE: Forward LTM: to LTM Company Name 4/17/14 4/10/14 High Low 2013 2012 P/E Revenue EBITDA EBITDA

ETHANOL BioFuel Energy Corp. $7.72 43.8% $8.50 $1.13 351.5% 109.8% NA 0.00x 1.0x 0.0x Green Plains Renewable Energy, Inc. 28.95 3.9% 32.60 10.49 49.4% 266.0% 12.5 0.51 9.8 4.6 Renewable Energy Group, Inc. 11.89 (0.8%) 16.50 8.51 3.8% 102.9% 15.6 0.24 1.8 0.2 Sector Average: 134.9% 187.9% 14.1x 0.37x 0.9x 2.4x

FRUIT & VEGETABLE Calavo Growers Inc. $32.42 (6.0%) $36.96 $24.54 7.1% 28.6% 19.8x 0.79x 16.9x 1.9x Chiquita Brands International Inc. 12.56 1.7% 13.68 6.95 7.4% 52.2% 11.2 0.38 9.9 5.4 Fresh Del Monte Produce Inc. 26.55 (0.2%) 30.82 24.00 (6.2%) 0.8% 13.8 0.47 9.3 1.4 Seneca Foods Corp. 29.71 1.2% 36.33 27.46 (6.8%) (2.3%) NA 0.44 11.6 5.5 The WhiteWave Foods Company 28.61 9.4% 30.46 15.61 24.7% 84.1% 13.8 0.47 9.3 1.4 Sector Average: 5.2% 32.7% 14.6x 0.44x 10.1x 3.1x

PROTEIN Cal-Maine Foods, Inc. $62.43 2.3% $64.22 $40.77 3.7% 55.2% 14.6x 0.99x 8.7x 0.4x The Hillshire Brands Company 36.11 2.6% 38.01 30.35 8.0% 28.3% 20.1 1.26 9.6 1.8 Hormel Foods Corporation 47.78 1.1% 49.47 37.46 5.8% 53.1% 20.4 1.38 12.5 0.3 Industrias Bachoco S.A.B. de C.V. 44.06 0.3% 46.14 30.19 9.4% 57.8% NA 0.59 5.9 0.5 * JBS S.A. 8.07 2.2% 9.08 5.66 (8.0%) 34.5% 11.4 0.52 7.9 5.4 Pilgrim's Pride Corporation 22.35 9.0% 22.44 8.63 37.5% 208.7% 13.9 0.73 NM NM Sanderson Farms, Inc. 81.87 6.1% 82.84 57.07 13.2% 72.2% 12.5 0.70 5.8 0.1 Seaboard Corp. 2539.46 1.0% 2948.24 2391.03 (9.1%) 0.4% 14.1 0.42 9.7 0.6 Tyson Foods, Inc. 42.65 3.2% 44.24 23.37 27.5% 119.8% 14.6 0.45 7.8 1.0 Sector Average: 9.8% 70.0% 15.2x 0.57x 8.8x 0.7x

BAKING & INGREDIENTS * ARYZTA AG $78.15 0.3% $78.85 $50.85 14.3% 66.8% 15.2x 1.48x 11.2x 2.8x Balchem Corp. 62.96 2.2% 66.34 41.55 7.3% 72.7% 30.6 5.04 22.3 0.0 Diamond Foods, Inc. 31.70 0.6% 35.58 13.69 22.7% 131.9% NM 1.86 23.8 8.7 Flowers Foods, Inc. 20.23 (0.4%) 25.67 18.70 (5.8%) 30.4% 19.4 1.38 12.4 2.3 * Grupo Bimbo, S.A.B. de C.V. 35.97 1.4% 47.50 32.46 (10.5%) 7.5% 26.6 1.19 11.0 2.2 J&J Snack Foods Corp. 96.95 1.8% 97.80 72.80 9.4% 51.8% 25.6 1.94 12.7 0.0 *Kerry Group plc 54.70 0.1% 57.76 39.75 8.3% 36.6% 19.5 1.83 15.4 1.9 Krispy Kreme Doughnuts, Inc. 17.49 2.3% 26.63 12.32 (9.3%) 86.5% 35.0 2.37 18.6 0.0 McCormick & Company, Incorporated 70.98 0.6% 75.26 62.75 3.0% 11.7% 21.3 2.50 14.2 1.8 Snyder's-Lance, Inc. 27.45 1.7% 32.49 24.38 (4.2%) 13.8% 21.0 1.37 12.9 2.7 *Tate & Lyle plc 6.55 (2.3%) 8.90 6.19 (19.1%) (14.1%) 12.1 1.01 7.6 1.8 Sector Average: 1.5% 45.0% 22.6x 1.51x 12.2x 2.2x

CANDY & NUTS The Hershey Company $100.61 2.0% $108.69 $85.14 3.5% 39.3% 24.4x 3.27x 14.9x 1.3x John B Sanfilippo & Son Inc. 23.40 2.4% 26.29 19.05 (5.2%) 28.7% NA 0.42 5.8 1.3 Rocky Mountain Chocolate Factory Inc. 11.60 (0.5%) 13.98 11.31 (0.1%) 9.8% 17.4 1.79 10.6 0.0 Tootsie Roll Industries Inc. 28.68 (1.4%) 34.22 27.67 (9.2%) 17.4% 26.1 3.01 17.9 0.1 Sector Average: (2.8%) 23.8% 22.6x 2.69x 12.8x 0.7x

WINE & BEVERAGE Boston Beer Co. Inc. $233.88 (1.2%) $265.53 $143.42 (3.3%) 74.0% 36.5x 4.05x 21.3x 0.0x Brown-Forman Corporation 88.92 (0.3%) 91.15 66.41 17.7% 40.6% 27.5 6.61 19.4 1.0 The Coca-Cola Company 40.72 4.7% 43.43 36.83 (1.4%) 12.3% 19.1 4.28 14.5 2.9 Constellation Brands Inc. 80.78 0.8% 85.91 46.87 14.8% 128.3% 19.7 4.58 15.9 5.3 * Cott Corporation 8.93 (0.2%) 11.45 7.78 4.4% 11.6% 19.5 0.58 6.2 2.4 Crimson Wine Group, Ltd. 8.78 1.3% 9.80 5.48 (0.7%) NA NA 3.38 16.5 0.0 Keurig Green Mountain, Inc. 98.38 (0.7%) 124.42 53.56 30.2% 138.0% 26.2 3.60 15.2 0.3 Monster Beverage Corporation 67.55 5.5% 75.63 50.75 (0.3%) 27.8% 27.4 4.74 17.6 0.0 Jones Soda Co. 0.43 9.6% 0.91 0.38 (10.4%) 43.3% NA 1.11 NM NM National Beverage Corp. 19.72 (1.9%) 22.26 13.85 (2.2%) 35.2% 19.3 1.42 11.8 0.5 Pepsico, Inc. 85.55 2.3% 87.06 77.01 3.1% 25.0% 18.7 2.28 12.1 2.6 Starbucks Corporation 70.15 (0.1%) 82.50 57.50 (10.5%) 30.8% 25.2 3.48 16.2 0.7 Willamette Valley Vineyards Inc. 6.13 2.1% 7.60 4.11 (2.6%) 66.1% NA 2.60 11.3 1.9 Sector Average: 3.0% 52.7% 23.9x 2.91x 14.6x 1.1x

Price Price as Compared to Enterprise Value to Total Debt Price Compared to 52-Week Range YE: Forward LTM: to LTM Company Name 4/17/14 4/10/14 High Low 2013 2012 P/E Revenue EBITDA EBITDA

DAIRY * Danone $52.71 0.1% $60.45 $48.33 0.7% 5.6% 19.0x 1.83x 10.5x 3.5x Dean Foods Company 15.52 1.0% 42.12 13.59 (9.7%) (53.0%) 19.8 0.26 6.2 2.4 Lifeway Foods Inc. 14.38 0.6% 19.99 10.65 (10.0%) 64.5% 52.0 2.45 23.1 1.0 * Saputo Inc. 55.05 (0.6%) 57.46 46.01 13.8% 9.4% 17.6 1.40 12.7 1.7 The WhiteWave Foods Company 28.61 9.4% 30.46 15.61 24.7% 84.1% 31.2 2.20 20.4 2.6 Sector Average: (1.3%) 6.6% 18.8x 1.81x 11.6x 2.2x

WHOLESALE, FOOD SERVICE, & DISTRIBUTION Core-Mark Holding Company, Inc. $77.92 1.8% $80.00 $49.88 2.6% 64.6% 18.3x 0.13x 9.8x 0.8x Sysco Corporation 36.03 0.3% 43.40 31.13 (0.2%) 13.8% 19.5 0.52 9.8 1.3 United Natural Foods, Inc. 68.24 4.1% 79.64 47.45 (9.5%) 27.3% 25.2 0.56 14.5 1.1 Sector Average: (2.4%) 35.2% 18.9x 0.54x 9.8x 1.1x

MASS MERCHANDISE & CLUB STORES Costco Wholesale Corporation $113.50 1.3% $126.12 $103.20 (4.6%) 15.0% 23.3x 0.45x 12.0x 1.2x Wal-Mart Stores Inc. 77.66 1.0% 81.37 71.51 (1.3%) 13.8% 14.6 0.64 8.6 1.6 Sector Average: (3.0%) 14.4% 18.9x 0.55x 10.3x 1.4x

DOLLAR STORES Dollar General Corporation $55.43 (0.0%) $62.93 $48.61 (8.1%) 25.7% 15.7x 1.11x 9.4x 1.4x Dollar Tree, Inc. 51.09 0.6% 60.19 46.36 (9.4%) 26.0% 16.3 1.41 9.5 0.7 Family Dollar Stores Inc. 56.84 (0.6%) 75.29 55.69 (12.5%) (10.4%) 17.3 0.69 8.3 0.9 Fred's, Inc. 17.79 0.7% 21.05 13.25 (3.7%) 33.7% 23.3 0.34 8.1 0.1 Sector Average: (8.5%) 18.7% 18.2x 1.07x 8.8x 0.8x

TRADITIONAL RETAIL * Delhaize Group $51.38 2.4% $53.70 $39.81 18.9% 69.9% 12.3x 0.32x 5.4x 2.3x Fairway Group Holdings Corp. 7.56 4.0% 28.87 6.67 (58.4%) NA NM 0.70 NM 108.2 Ingles Markets, Incorporated 22.65 (1.2%) 29.33 20.15 (16.4%) 31.2% 10.5 0.38 6.9 4.4 The Kroger Co. 44.28 0.9% 45.47 32.77 12.0% 70.2% 13.9 0.34 7.5 2.5 The Pantry, Inc. 15.57 (1.3%) 17.62 10.99 (7.2%) 28.4% 34.5 0.18 6.4 4.7 Roundy's, Inc. 6.65 (0.3%) 10.96 5.53 (32.6%) 49.4% 18.9 0.25 5.8 4.4 Safeway Inc. 34.12 (9.8%) 40.25 22.26 4.8% 88.6% 26.7 0.20 4.6 2.6 Spartan Stores Inc. 22.29 (1.9%) 25.74 16.10 (8.2%) 45.1% 14.7 0.42 11.9 5.0 SUPERVALU Inc. 6.92 3.6% 8.76 4.93 (5.1%) 180.2% 11.1 0.28 6.5 4.1 Village Super Market Inc. 25.51 1.6% 39.71 24.93 (17.7%) (22.4%) 13.2 0.20 5.6 0.8 Weis Markets, Inc. 48.29 0.4% 54.13 40.19 (8.1%) 23.3% 17.8 0.45 6.8 0.0 Sector Average: (10.7%) 56.4% 17.4x 0.30x 6.2x 3.1x

SPECIALTY RETAIL The Fresh Market, Inc. $34.36 (3.9%) $57.17 $31.35 (15.2%) (28.6%) 21.7x 1.13x 10.3x 0.3x Natural Grocers by Vitamin Cottage, Inc. 35.20 (5.6%) 44.60 23.38 (17.1%) 84.4% 53.9 1.76 23.0 0.6 Sprouts Farmers Market, Inc. 33.93 (4.7%) 49.45 33.56 (11.7%) NA 54.5 2.22 28.7 2.3 Whole Foods Market, Inc. 48.13 (3.0%) 65.59 42.28 (16.8%) 5.6% 28.5 1.27 13.4 0.0 Sector Average: (15.2%) 20.5% 25.1x 1.39x 11.8x 0.8x

RESTAURANTS Bob Evans Farms, Inc. $43.46 (5.1%) $60.22 $39.78 (14.1%) 8.1% 19.2x 0.89x 8.8x 2.3x Brinker International, Inc. 50.56 (0.2%) 55.45 36.52 9.1% 63.1% 17.3 1.46 10.2 2.0 The Cheesecake Factory Incorporated 46.97 0.9% 49.74 37.42 (2.7%) 43.6% 20.0 1.21 9.5 0.3 Chipotle Mexican Grill, Inc. 519.61 (2.7%) 622.90 328.36 (2.5%) 74.7% 38.4 4.55 23.6 0.0 Darden Restaurants, Inc. 48.47 (1.9%) 55.25 44.78 (10.9%) 7.5% 17.9 1.03 9.5 2.9 DineEquity, Inc. 76.39 0.5% 85.74 64.44 (8.6%) 14.0% 17.7 4.26 10.3 5.2 Jack in the Box Inc. 56.56 0.6% 62.90 35.00 13.1% 97.8% 23.3 1.87 11.0 1.7 McDonald's Corp. 100.25 0.8% 103.34 92.22 3.3% 13.6% 17.2 3.93 10.9 1.4 Panera Bread Company 168.00 0.2% 194.77 150.33 (4.9%) 5.8% 24.2 1.90 10.9 0.0 The Wendy's Company 8.51 (2.5%) 10.27 5.28 (2.4%) 81.1% 25.1 1.61 11.4 4.3 Yum! Brands, Inc. 76.34 1.5% 78.68 63.16 1.0% 15.0% 21.1 2.77 13.1 1.1 Sector Average: (0.5%) 41.6% 19.2x 1.42x 10.5x 2.3x

Notes: * Denotes local currency. Source: Capital IQ. Summary multiples adjusted for extraordinary and non-recurring items; outliers excluded from mean calculation.

Major Indices (1-year & 12-year History)

S&P 500 NASDAQ Composite Index 2,100 4,500 1,950 4,000 1,800 3,500 1,650 3,000 1,500 1,350 2,500

1,200 2,000 1,050 1,500 900 1,000 750 600 500

Months/Years Months/Years

1-year 12-year 1-year 12-year

Dow Jones Industrial Average LFA Sector Indices vs. S&P 500 (1-year Only) 19,000 145

17,000 135 15,000

125 13,000

11,000 115 9,000

105 7,000

5,000 95

Months/Years 85 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 1-year 12-year S&P 500 Inputs & Agribusiness Diversified Foods Protein Baking & Ingredients Grocery

10-year Treasury CBOE Market Volatility Index - VIX 7.0 80

70 6.0 60 5.0 50

4.0 40

30 3.0 20 2.0 10

1.0 0

Months/Years Months/Years 1-year 12-year 1-year 12-year

Economic Update

 The Commerce Department announced that U.S. retail sales increased 1.1% in March, the largest gain since September 2012, following a 0.7% increase in February. Retail sales, which comprise nearly a third of consumer spending, increased in nearly all categories. The larger-than-expected rise in retail sales follows upbeat employment data, suggesting an economy that is building momentum at the end of the first quarter after a sluggish start. Core retail sales, which exclude sales of automobiles, gasoline, building materials, and food services, and are more correlated with the consumer spending component of GDP, rose 0.8% in March, following a revised 0.4% increase in February.

 The Federal Reserve announced that factory production increased 0.5% in March following a revised 1.4% increase in February as manufacturers produced more furniture, clothing, chemicals, and aerospace products. Manufacturing output has increased 2.8% over the past twelve months despite a slowdown in January and December, providing further positive evidence that the economy is growing and demand by businesses and consumers is increasing. Total industrial production, which includes manufacturing, mining, and utilities increased 0.7% in March, following a 1.2% increase in February.

Food For Thought…

Partner Column Written By Philip Zoloto That equates to around an 8.0x EBITDA multiple. Michael Foods turned out to be a private equity investor’s dream as Last week it was announced that Post Holdings won the the company increased its earnings and also benefited from auction to acquire Michael Foods, Inc., a leading producer of multiple expansion as evidenced by the 9.5x EBITDA value-added food products and service solutions to customers multiple on the recent sale. Proof that in growth companies across the foodservice, retail and, food ingredient channels, for it’s okay to pay up for the future cash flow opportunities! $2.45 billion in its largest deal ever. Michael Foods, which produces and distributes specialty eggs, refrigerated potatoes, cheese, and other dairy products under brands such as Have a good week. Papetti's, All Whites, Better 'n Eggs, Simply Potatoes, and Crystal Farms provides Post an entry into the protein and away-from- home breakfast segments. Based on 2014 estimated EBITDA for Michael Foods, the deal is valued at a hefty 9.6x EBITDA. Interestingly, Post has only indicated $10 million (approximately 3% of EBITDA) of expected synergies from benefits of scale. As such, the valuation seems to be based on Post’s expectations of future growth (that and the fact that the word on the street was that the deal was not going to happen for less than about $2.5 billion!).

Picking up on a Weekly Update column I wrote in September of 2013, the Michael Foods deal is the fifth major acquisition since Post was spun out of Ralcorp in 2012 - three others of which we know traded at a high EBITDA multiple. Each acquisition follows on Post’s strategy of investing in large secular themes in the food industry. Dakota Growers Pasta (8- 8.8x EBITDA) provided an entry to private label pasta, Premier Nutrition Corporation (9.0x EBITDA) provided an entry into the active nutrition and supplements market, Hearthside Food Solutions (8.0x EBITDA) increased Post’s presence in branded and private-label cereal, granola and snacks, and Attune Foods increased Post’s presence in natural and organic cereal. Post’s strategy of being an active acquirer is supported by its own valuation. As of last Friday, Post was trading at 15.0x EBITDA, which gives the company flexibility on valuations in acquisitions that any public company in the food space would envy. The stock is one to watch over the next year or so as we see the benefits on Post’s earnings (or lack thereof) of the recent deals.

I did some quick back of the envelope math on the deal for the prior owners. Based on info I have found, Michael Foods states that its EBITDA has grown at 5.3% per year since 2008. For the full year 2014 Michael Foods expects EBITDA to be between $255 million and $270 million. I took the midpoint at $262.5 million for 2014 and then backed into the EBITDA in 2010 of around $213 million when Goldman Sachs acquired the business from Thomas Lee for $1.7 billion.

Food For Thought…

B&G Foods Announces 1Q Earnings. B&G Foods, Inc. Chipotle Reports 1Q Results. Chipotle Mexican Grill, Inc. (NYSE: BGS) announced first quarter earnings of $17.8 million, (NYSE: CMG) announced earnings of $83.1 million for the a 9.2% decline from the same period last year. Net sales for the first quarter, an 8.5% increase from the same period last year. quarter increased 15.7% from the prior year period to $198.1 Revenue increased 24.4% for the quarter to $904.2 million, million, driven largely by growth in snack sales from B&G’s driven by 13.4% growth in comparable restaurant sales, along recent acquisitions. Some of the company’s recent acquisitions with newly opened restaurant locations. Chipotle opened 44 include Pirate’s Brands, TrueNorth, Rickland Orchards, New new restaurants during the quarter, for a total restaurant York Style, and Old London, and contributed over $45 million count of 1,637. Comparable restaurant sales increased as a in sales as a result of recent innovation and distribution gains. result of growth in store traffic, as well as an increase in Sales in B&G’s base business, on the other hand, declined by average checks. Higher commodity prices for avocados, beef, 4.6% due to unit volume and net price declines of $5.2 million and cheese caused food costs to increase to 34.5% of revenue, and $2.7 million, respectively. Gross margin for the quarter up 150 basis points from the prior year period. Restaurant- declined to 32.6% from 34.4% as a result of a net price decline level operating margin declined 40 basis points to 25.9%, of $2.7 million and an increase in distribution costs. Selling, largely as a result of the higher food costs. Chipotle, which general, and administrative expenses increased 36.9% for the uses natural and high quality ingredients, also announced quarter to $22.6 million, reflecting increases in consumer that it plans to raise prices by 3% to 5% per menu item marketing, acquisition-related transaction costs, and starting in a few weeks to cope with the surging commodity warehousing expenses. Interest expenses increased 14.0%, prices – the company’s first price increase in three years. which also led to a decline in earnings despite sales growth. Chipotle Mexican Grill, Inc. (CMG) 8-year History B&G Foods, Inc. (BGS) 7-year History 700 40 600

35 500 30 400 25 300 20

15 200

10 100

5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 2007 2008 2009 2010 2011 2012 2013 2014

Coca-Cola Co. Announces 1Q Results. Coca-Cola PepsiCo Reports Rise In 1Q Earnings. PepsiCo, Inc. (NYSE: Company (NYSE: KO) reported first quarter 2014 earnings of PEP) announced first quarter earnings of $1.2 billion, a 13.1% $1.62 billion, down from $1.75 billion compared to the year- increase from the prior year period, driven largely by growth earlier quarter. Global unit case volume grew 2%; however, in its snacks business and in emerging economies. Sales for the net revenues fell 4% to $10.58 billion. The core Coke brand quarter increased to $12.6 billion, holding steady with the prior posted flat volumes in North America. The company’s non- year period. On a reported basis, revenue increased 1% in the soda beverages including Minute Maid Juice and Dasani global snacks segment, but declined 1% in the global beverages water continue to buoy results with world-wide volume segment as a result of unfavorable foreign exchange translation climbing 8%. The company is targeting 3% to 4% annual and structural changes. PepsiCo’s Frito-Lay division had beverage volume growth; a metric many observers claim is organic revenue growth of 4% as a result of a 3% increase in not realistic. Coke has launched an aggressive, wide-ranging organic volume and 1% of effective net pricing. The Latin marketing effort while investing in core carbonated drinks America Foods segment had a 9% increase in organic revenue and introducing new products as it struggles with continued driven primarily by 12% of effective net pricing, offset by a 3% worse trends in soda sales. Last month, trade publication volume decline. PepsiCo also announced that it is on track to Beverage Digest said the U.S. industry realized its ninth deliver $1 billion of productivity savings in 2014 and expects consecutive yearly volume contraction last year as consumers low-single-digit commodity inflation over the next year. abandon diet sodas.

Heard on the Street…

Post Acquires Michael Foods Group. Post Holdings, Inc. ADM To Sell Fertilizer And Chocolate Businesses. Archer (NYSE: POST) has agreed to acquire Minnetonka, MN-based Daniels Midland Co. (NYSE: ADM) announced that it will Michael Foods Group, Inc., a producer and distributor of eggs, sell its Brazilian and Paraguayan fertilizer business to Mosaic potatoes, and dairy products, for $2.45 billion from affiliates of Co. for $350 million and will likely sell its global chocolate GS Capital Partners, affiliates of Thomas H. Lee Partners, and business within a few months. The fertilizer distribution others. The deal represents the largest transaction to date for business in Brazil and Paraguay will increase Mosaic’s Post, which has been on an acquisition spree recently acquiring production capacity in the countries by 60%. The deal will companies with such products as protein bars, peanut butter, include four blending and warehousing facilities in Brazil and pasta. For the fiscal year ended December 28, 2013, and one in Paraguay, complementing Mosaic’s recent $1.4 Michael Foods had net sales of $1.95 billion and EBITDA of billion acquisition of CF Industries Holdings Inc’s (NYSE: CF) $254.2 million, implying an enterprise valuation of 1.3x net phosphate-fertilizer business. sales and 9.5x EBITDA. The acquisition will advance Post’s strategy of diversifying its business and capitalizing on ADM also plans to sell its global chocolate-making business, consumer trends of increased protein consumption and away- which is estimated to rank among the world’s five largest, from-home breakfast occasions. In addition, the acquisition but will continue to own the majority of its cocoa-pressing offers distribution relationships and distribution channels that business. Over the past year, several potential buyers have it can leverage for other products. approached ADM about buying its chocolate business, and the company believes it could secure the best deal by dividing the business into pieces. The chocolate-making River Country Cooperative & CHS Discuss Merger. River operations include facilities in the U.S., Canada, the U.K., Country Cooperative (“RCC”), a diversified ag retailer based in Belgium, and Germany. south St. Paul, MN and CHS, Inc. (NASDAQ: CHSCP), the nation’s leading farmer-owned cooperative, have completed their study of a formal business merger between the two and USDA To Require Reporting Of PEDv. The U.S. will move the process forward, pending further due diligence. Department of Agriculture announced that it will require the The proposed agreement will be voted upon by RCC’s pork industry to report outbreaks of the porcine epidemic membership this summer. Myron Tank, chairman of the diarrhea virus (“PEDv”) to the government in an effort to board, RCC, stated, “The business is solid today, but our control its spread. PEDv is not currently part of a list of customers’ needs are changing and we want to grow our size diseases that must be reported under international standards and scale to meet those needs. We looked at a number of that are aimed at coordinating disease control. The agency different ways to do that and determined CHS would be the will utilize the help of swine veterinarians to help develop best partner to align with for the future.” monitoring and control procedures to slow the disease’s spread. Up to this point, U.S. hog farmers and veterinarians have only voluntarily reported incidents of the disease, so the Private Equity Firm Acquires Gold Star Foods. Gold Star extent of the disease’s impact is uncertain. Additionally, the Foods, Inc., a school meal distributor based in Ontario, Canada, USDA will also require tracking of swine delta coronavirus, a has been acquired by New York-based Castle Harlan, Inc. from disease that has recently emerged in at least ten states. Chicago-based Prospect Partners. Gold Star distributes healthy meals through federal and state programs for breakfasts and lunches to over 3,500 K-12 schools in 380 school districts across Shearer’s Acquires Medallion Foods. Shearer’s Foods, a California, Arizona, and Nevada. The company offers over private label salty snack manufacturer, has acquired the 6,000 products purchased from more than 600 food assets of the Medallion Foods business from ConAgra Foods manufacturers and farms, including fresh bread and produce, (NYSE: CAG), Inc., for $33.5 million. Medallion Foods is and refrigerated, frozen, and dry menu items. Under the based in Newport, Arkansas, and manufactures value brand company’s current management team, which will remain in and private label corn-based snack products, including place, Gold Star has transitioned to a new state-of-the-art tortilla chips, corn chips, and extruded corn products. distribution facility and information technology platform, ConAgra acquired Medallion as part of its acquisition of considerably increased business with existing customers, and Ralcorp Holdings, Inc., which bought Medallion for $101.8 successfully completed and integrated a strategic acquisition. million in 2005.

Loans

After a relatively slow start to the year, loan activity has picked U.S. and Canada Monthly Loan Issuance up as more cash-heavy U.S. companies plan acquisitions and 600 600 target global growth. Loans in the form of acquisition 500 500 financing have reached a total of approximately $77.9 billion year to date, while nearly 75% of the 145 CEOs and CFOs 400 400 polled by KPMG said they are planning for an acquisition this $300 300 year, compared to only half that said they pursued a merger or 200 200 takeover last year. The large amount of debt refinancing that of Issues Number Proceeds ($ ($ in billions) Proceeds occurred in 2013 enabled companies to lower their borrowing 100 100 costs but also lowered returns to investors. In turn, lenders and borrowers both look for loan-backed M&A activity to pick 0 0 up in 2014. The middle market will play a large role, as 91% of the polled CEOs and CFOs expect their acquisitions to be Proceeds Number of Issues below $250 million in total enterprise value. Source: Thomson Financial. Middle market sponsored lending totaled $17.6 billion in 1Q Year-to-Date U.S. and Canada Use of Proceeds

2014, putting it on par with 4Q 2013 numbers and up 11.4% 3% 1% 1% 1% 1% 1% from the $15.8 billion totaled in 1Q 2013. Bankers have General Corp. Purp. 5% indicated that they are being more selective in their lending Refin/Ret Bank Debt and have mandated self-imposed limits. Relationships have 5% Acquisition Fin. become increasingly more important as bankers have been Refinancing limited in the amount of exceptions they can make. Bankers 13% Leveraged Buyout 50% will tend to defend the credit on these larger middle market Working Capital deals that bring in big fees. It will be interesting to see how Recapitalization 19% things play out as 2014 progresses and bankers gain a better Capital Expenditures feel for the impact of new regulations such as the leveraged Project Finance lending guidance. Recent loans in the food and agribusiness space are detailed below. Source: Thomson Financial.

Recent Food & Agribusiness Loan Issuance ($ in millions) Initial Pricing Financial Loan Package (Spread Over Borrower Business Description Close Date Maturity Loan Description Amount (US$ Mil) LIBOR - bps) Bojangles' Restaurants Owns and operates restaurants 04/11/14 09/15/18 RevCred/TLA 274.60 +275.000 Fogo de Chao Owns and operates restaurants 04/08/14 07/20/19 Term Loan B 205.00 +400.000 Jack Links Beek Jerky Produces meat snacks 03/31/14 03/23/19 RevCred/Term Ln 390.00 - Brester Dairy Manufactures cheeses 03/31/14 03/31/19 RevCred/Term Ln 70.00 +125.000 Animal Health International Wholesales animal health products 03/31/14 03/31/19 Rev Cred Fac 265.00 +200.000 Sailormen Inc. Owns and operates restaurants 03/26/14 n/a Term Loan 54.00 - Novel Ingredient Services Ingredient supplier for specialty foods 03/26/14 03/26/19 RevCred/TLA 33.50 +425.000 Taconic Farms Owns and operates lab animal breeding center 03/25/14 02/20/19 RevCred/TLA 36.20 +200.000 Taconic Farms Owns and operates lab animal breeding center 03/25/14 01/25/17 RevCred/TLA 36.20 +150.000 Taconic Farms Owns and operates lab animal breeding center 03/25/14 11/25/15 RevCred/TLA 36.20 +200.000 Columbus Manufacturing Produces and wholesales meat delicacies 03/24/14 03/24/19 RevCred/Term Ln 141.00 +375.000 Aurora Cooperative Agricultural cooperative 03/21/14 07/01/17 Rev Cred Fac 350.00 +225.000 Jack in the Box Owns and operates restaurants 03/19/14 03/19/19 RevCred/TLA 800.00 +175.000 Steak N Shake - 4 Restaurants Owns and operates restaurants 03/18/14 n/a RevCred/TLB 250.00 +375.000 Cargill Produces and wholesales grains and field beans 03/18/14 03/18/15 364d Revolver 1,000.00 +30.000 Tri-Union Seafoods Produces and wholesales canned tuna 03/10/14 09/12/16 Rev Cred Fac 110.00 +275.000 Bellisio Foods Produces and wholesales frozen food products 03/07/14 08/03/19 RevCred/TLB 326.04 +350.000 The Andersons Wholesales turf and ornamental plants 03/04/14 03/04/19 Rev Cred Fac 850.00 +150.000

Average Spread Over LIBOR +245.625 Source: Thomson Financial.

Commodities Overview (1-year & 12-year History)

Corn Wheat $9.00 $12.00 11.00 8.00 10.00 7.00 9.00 6.00 8.00 7.00 5.00 6.00 4.00 5.00 3.00 4.00 DollarsBushel per DollarsBushel per 3.00 2.00 2.00 1.00 1.00

Months/Years Months/Years

1-year 12-year 1-year 12-year

Lean Hogs Chicken – Broilers 1.40 $1.10

$1.20 1.00 0.90 1.00 0.80 0.80 0.70 0.60 0.60 Dollars per Pound perDollars Dollars per Pound Dollars per 0.40 0.50

0.20 0.40

Months/Years Months/Years

1-year 12-year 1-year 12-year

Cheese Gold 2.40 $2,100

2.20 1,800 2.00 1,500 1.80 1,200 1.60 900 1.40 1.20 600 Dollars per Pound perDollars

1.00 OunceTroy Dollars per 300 0.80 0

Months/Years Months/Years

1-year 12-year 1-year 12-year

Broiler price based off spot closing price. All other commodity prices are based off the closing price of their respective nearby futures contract.

Sources: Thomson Financial Data Securities, Capital IQ, Reuters, Edgar Online, Wall Street Journal, Barron’s, New York Times, Bloomberg, Chicago Tribune, Denver Post, MarketWatch, USDA, The Economist, BusinessWeek, Food Institute, Supermarket News, LPC, Company Press Releases. The information contained in this publication is compiled using publicly available news/media sources and industry-specific sources that Lakeshore Food Advisors, LLC (“LFA”) believes to be reliable, but the accuracy and completeness of which LFA cannot guarantee.

Please send your feedback and comments to Alexander Webb at (312) 348-6387 or [email protected].