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Canada Bread Reports Results for Third Quarter 2010

^{Published on 2010-10-28 05:50:50 - Market Wire}
 

 - Adjusted Operating Earnings of $32.4 million compared to $36.9 million last year - Adjusted EPS of $0.85 compared to $1.00 last year - Net earnings of $14.0 million compared to $25.1 million last year - Basic EPS of $0.55 compared to $0.99 last year 

 Financial Overview ------------------ 

 Business Segment Review ----------------------- Following is a summary of sales by business segment: ------------------------------------------------------------------------- ($ thousands) Third Quarter Year-to-Date ------------------------------------------------ 2010 2009 2010 2009 ------------------------------------------------------------------------- Fresh Bakery $285,232 $287,285 $824,951 $840,546 Frozen Bakery 126,132 137,270 370,407 433,052 ------------------------------------------------------------------------- Sales $411,364 $424,555 $1,195,358 $1,273,598 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Following is a summary of Adjusted Operating Earnings by business segment: ------------------------------------------------------------------------- ($ thousands) Third Quarter Year-to-Date 2010 2009 2010 2009 ------------------------------------------------------------------------- Fresh Bakery $30,397 $33,260 $78,603 $71,457 Frozen Bakery 2,032 3,655 4,537 19,949 ------------------------------------------------------------------------- Adjusted Operating Earnings $32,429 $36,915 $83,140 $91,406 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fresh Bakery ------------ 

 Frozen Bakery ------------- 

 Other Matters ------------- 

 Forward-Looking Statements -------------------------- 

 Reconciliation of Non-GAAP Financial Measures --------------------------------------------- 

 Three months ended September 30, ------------------------------------------------------------------------- ($ thousands) 2010 2009 ------------------------------------------------------------------------- Fresh Frozen Consoli- Fresh Frozen Consoli- Bakery Bakery dated Bakery Bakery dated Net earnings $13,980 $25,050 Income taxes 7,055 10,482 ------------------------------------------------------------------------- Earnings from operations before income taxes 21,035 35,532 Interest expense 949 673 ------------------------------------------------------------------------- Earnings from operations before income taxes and interest expense 21,984 36,205 Restructuring and other related costs 10,229 283 10,512 0 597 597 Other income (67) 0 (67) 113 0 113 ------------------------------------------------------------------------- Adjusted Operating Earnings $30,397 $2,032 $32,429 $33,260 $3,655 $36,915 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Nine months ended September 30, ------------------------------------------------------------------------- ($ thousands) 2010 2009 ------------------------------------------------------------------------- Fresh Frozen Consoli- Fresh Frozen Consoli- Bakery Bakery dated Bakery Bakery dated Net earnings $47,394 $62,469 Income taxes 20,082 26,115 ------------------------------------------------------------------------- Earnings from operations before income taxes 67,476 88,584 Interest expense 2,837 3,980 ------------------------------------------------------------------------- Earnings from operations before income taxes and interest expense 67,340 2,973 70,313 71,419 21,145 92,564 Restructuring and other related costs 11,457 1,564 13,021 (81) 1,352 1,271 Other income (194) 0 (194) 119 (2,548) (2,429) ------------------------------------------------------------------------- Adjusted Operating Earnings $78,603 $4,537 $83,140 $71,457 $19,949 $91,406 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 Three months ended Nine months ended ($ per share) September 30, September 30, 2010 2009 2010 2009 ------------------------------------------------------------------------- Basic Earnings per Share $ 0.55 $ 0.99 $ 1.86 $ 2.46 Restructuring and other related costs(i) 0.30 0.02 0.38 0.04 ------------------------------------------------------------------------- Adjusted Earnings per Share(ii) $ 0.85 $ 1.00 $ 2.24 $ 2.50 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (i) Includes per share impact of restructuring and other related costs, net of tax. (ii) Does not add due to rounding. Consolidated Interim Financial Statements (Expressed in Canadian dollars) CANADA BREAD COMPANY, LIMITED Nine months ended September 30, 2010 and 2009 CANADA BREAD COMPANY, LIMITED Consolidated Balance Sheets (In thousands of Canadian dollars) ------------------------------------------------------------------------- As at As at As at September 30, September 30, December 31, 2010 2009 2009 ------------------------------------------------------------------------- (Unaudited) (Unaudited) Assets Current assets Cash and cash equivalents $ 106,961 $ 24,549 $ 57,698 Accounts receivable 63,840 70,879 63,620 Due from Maple Leaf Foods Inc. 1,361 - - Inventories 56,046 58,266 56,659 Future tax asset 4,259 4,878 1,640 Prepaid expenses and other assets 7,539 7,065 4,438 ------------------------------------------------------------------------- $ 240,006 $ 165,637 $ 184,055 Property and equipment 391,486 392,695 387,252 Goodwill 380,845 392,456 386,807 Other intangible assets 15,125 18,775 16,678 Other long-term assets 11,522 10,616 11,620 ------------------------------------------------------------------------- $ 1,038,984 $ 980,179 $ 986,412 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank indebtedness $ 8,070 $ 4,357 $ 4,247 Accounts payable and accrued charges 196,490 169,361 172,172 Due to Maple Leaf Foods Inc. - 4,971 3,817 Dividends payable 1,525 1,525 1,525 Income and other taxes payable 13,049 13,610 13,155 ------------------------------------------------------------------------- $ 219,134 $ 193,824 $ 194,916 Long-term debt 3,117 - 2,547 Future tax liability 29,856 34,079 33,338 Other long-term liabilities 8,271 8,639 8,524 Shareholders' equity 778,606 743,637 747,087 ------------------------------------------------------------------------- $ 1,038,984 $ 980,179 $ 986,412 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Earnings (In thousands of Canadian dollars, except share amounts) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- Sales $ 411,364 $ 424,555 $1,195,358 $1,273,598 Cost of goods sold 324,476 335,413 948,327 1,023,257 ------------------------------------------------------------------------- Gross margin $ 86,888 $ 89,142 $ 247,031 $ 250,341 Selling, general and administrative expenses 54,459 52,227 163,891 158,935 ------------------------------------------------------------------------- Earnings from operations before the following: $ 32,429 $ 36,915 $ 83,140 $ 91,406 Restructuring and other related costs (10,512) (597) (13,021) (1,271) Other income (expense) 67 (113) 194 2,429 ------------------------------------------------------------------------- Earnings before interest and income taxes $ 21,984 $ 36,205 $ 70,313 $ 92,564 Interest expense 949 673 2,837 3,980 ------------------------------------------------------------------------- Earnings before income taxes $ 21,035 $ 35,532 $ 67,476 $ 88,584 Income taxes 7,055 10,482 20,082 26,115 ------------------------------------------------------------------------- Net earnings $ 13,980 $ 25,050 $ 47,394 $ 62,469 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share - basic and diluted $ 0.55 $ 0.99 $ 1.86 $ 2.46 ------------------------------------------------------------------------- Weighted average number of shares (millions) 25.4 25.4 25.4 25.4 ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Comprehensive Income (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- Net earnings $ 13,980 $ 25,050 $ 47,394 $ 62,469 Other comprehensive loss (6,798) (23,530) (11,300) (22,610) ------------------------------------------------------------------------- Comprehensive income $ 7,182 $ 1,520 $ 36,094 $ 39,859 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Retained Earnings (In thousands of Canadian dollars, except share amounts) ------------------------------------------------------------------------- Nine months ended September 30, (Unaudited) 2010 2009 ------------------------------------------------------------------------- Retained earnings, beginning of period $ 658,541 $ 587,163 Net earnings 47,394 62,469 Dividends declared ($0.18 per share; 2009: $0.18 per share) (4,575) (4,575) ------------------------------------------------------------------------- Retained earnings, end of period $ 701,360 $ 645,057 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Cash Flows (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- Cash provided by (used in): Operating activities Net earnings $ 13,980 $ 25,050 $ 47,394 $ 62,469 Add (deduct) items not affecting cash: Depreciation and amortization 13,089 13,551 38,160 41,706 Future income taxes (4,490) (1,303) (6,423) (2,099) Loss (gain) on sale of property and equipment (62) 131 (109) 461 Amortization of terminated interest rate swap 659 672 1,976 1,317 Change in provision for restructuring and other related costs 9,746 367 10,093 (607) Other (244) (562) (170) (2,593) Change in non-cash operating working capital 11,869 (6,722) 5,668 (34,810) ------------------------------------------------------------------------- Cash provided by operating activities $ 44,547 $ 31,184 $ 96,589 $ 65,844 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Financing activities Dividends paid (1,525) (1,525) (4,575) (4,575) Net increase (decrease) in long-term debt 697 (15,038) 570 (4,518) Settlement of interest rate swaps with Maple Leaf Foods Inc. - - - (8,502) ------------------------------------------------------------------------- Cash used in financing activities $ (828) $ (16,563) $ (4,005) $ (17,595) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Investing activities Additions to property and equipment (25,778) (6,081) (47,888) (30,447) Proceeds from sale of property and equipment 55 46 740 515 Other 91 (7) 4 (952) ------------------------------------------------------------------------- Cash used in investing activities $ (25,632) $ (6,042) $ (47,144) $ (30,884) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Increase in cash and cash equivalents $ 18,087 $ 8,579 $ 45,440 $ 17,365 Net cash and cash equivalents, beginning of period 80,804 11,613 53,451 2,827 ------------------------------------------------------------------------- Net cash and cash equivalents, end of period $ 98,891 $ 20,192 $ 98,891 $ 20,192 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net cash and cash equivalents is comprised of: Cash and cash equivalents $ 106,961 $ 24,549 $ 106,961 $ 24,549 Bank indebtedness (8,070) (4,357) (8,070) (4,357) ------------------------------------------------------------------------- Net cash and cash equivalents, end of period $ 98,891 $ 20,192 $ 98,891 $ 20,192 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Segmented Financial Information (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, (Unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- Sales Fresh Bakery $ 285,232 $ 287,285 $ 824,951 $ 840,546 Frozen Bakery 126,132 137,270 370,407 433,052 ------------------------------------------------------------------------- $ 411,364 $ 424,555 $1,195,358 $1,273,598 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings from operations before restructuring and other related costs and other income (expense) Fresh Bakery $ 30,397 $ 33,260 $ 78,603 $ 71,457 Frozen Bakery 2,032 3,655 4,537 19,949 ------------------------------------------------------------------------- $ 32,429 $ 36,915 $ 83,140 $ 91,406 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Additions to property and equipment Fresh Bakery $ 19,819 $ 4,246 $ 33,309 $ 15,677 Frozen Bakery 5,959 1,835 14,579 14,770 ------------------------------------------------------------------------- $ 25,778 $ 6,081 $ 47,888 $ 30,447 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Depreciation and amortization Fresh Bakery $ 7,309 $ 6,757 $ 20,574 $ 20,816 Frozen Bakery 5,780 6,794 17,586 20,890 ------------------------------------------------------------------------- $ 13,089 $ 13,551 $ 38,160 $ 41,706 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- As at As at As at September 30, September 30, December 31, 2010 2009 2009 ------------------------------------------------------------------------- (Unaudited) (Unaudited) Total assets Fresh Bakery $ 460,994 $ 447,100 $ 441,020 Frozen Bakery 449,114 493,270 476,681 Non-allocated assets 128,876 39,809 68,711 ------------------------------------------------------------------------- $ 1,038,984 $ 980,179 $ 986,412 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Goodwill Fresh Bakery $ 157,146 $ 155,949 $ 155,946 Frozen Bakery 223,699 236,507 230,861 ------------------------------------------------------------------------- $ 380,845 $ 392,456 $ 386,807 ------------------------------------------------------------------------- -------------------------------------------------------------------------