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Canada Bread Reports Results for the First Quarter 2011

^{Published on 2011-04-28 05:41:35 - Market Wire}
 

 - Adjusted Operating Earnings(1) were $16.7 million compared to $20.6 million last year - Adjusted EPS(1) of $0.56 was unchanged from the prior year - Net earnings in the quarter declined to a loss of $1.0 million, largely due to $20.1 million in pre-tax restructuring costs 

 (1): Adjusted Operating Earnings are defined as earnings from operations before restructuring and other related costs and other income (expense). Adjusted Earnings per Share ("Adjusted EPS") are defined as basic earnings per share adjusted for the impact of restructuring and other related costs, net of tax. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures in this news release. Financial Overview ------------------ 

 Business Segment Review ----------------------- 

 ------------------------------------------------------------------------- (Unaudited) First Quarter ($thousands) ----------------------- 2011 2010 ------------------------------------------------------------------------- Fresh Bakery $255,085 $257,189 Frozen Bakery 116,675 124,743 ------------------------------------------------------------------------- Sales $371,760 $381,932 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- (Unaudited) First Quarter ($ thousands) ----------------------- 2011 2010 ------------------------------------------------------------------------- Fresh Bakery $17,985 $20,929 Frozen Bakery (1,261) (281) ------------------------------------------------------------------------- Adjusted Operating Earnings $16,724 $20,648 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fresh Bakery ------------ 

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

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

 - the risks associated with implementing and executing its business transformation strategy, - the risks associated with changes in the Company's shared systems and processes; - the Company's exposure to currency exchange risks; - the ability of the Company to hedge against the effect of commodity price changes through the use of commodity futures and options; - the risks associated with a consolidating retail environment; - the risks posed by food contamination, consumer liability and product recalls; - the risks related to business acquisitions and capital expansion projects; - the risks posed by compliance with extensive government regulation; - the risks posed by litigation; - the impact of changes in consumer tastes and buying patterns; - the impact of extensive environmental regulation and potential environmental liabilities; - the risks associated with complying with differing employment laws and practices globally and the potential for work stoppages due to non-renewal of collective agreements; - the impact on pension expense and funding requirements of fluctuations in the market prices of fixed income and equity securities and changes in interest rates; - the risks associated with the Company's independent distributors; and - the risks posed by competition. 

 Reconciliation of Non-IFRS Financial Measures --------------------------------------------- 

 ------------------------------------------------------------------------- (Unaudited) Three months ended March 31, 2011 ------------------------------------------------------------------------- ($ thousands)(i) Fresh Frozen Consoli- Bakery Bakery dated ------------------------------------------------------------------------- Net loss ($966) Income taxes (2,621) ------------------------------------------------------------------------- Loss from operations before income taxes (3,587) Interest expense 339 ------------------------------------------------------------------------- $8,468 ($11,716) (3,248) Other Income (78) - (78) Restructuring and other related costs 9,595 10,455 20,050 ------------------------------------------------------------------------- Adjusted Operating Earnings $17,985 ($1,261) $16,724 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (i) May not add due to rounding ------------------------------------------------------------------------- (Unaudited) Three months ended March 31, 2010 ------------------------------------------------------------------------- ($ thousands)(i) Fresh Frozen Consoli- Bakery Bakery dated ------------------------------------------------------------------------- Net earnings $12,969 Income taxes 5,066 ------------------------------------------------------------------------- Earnings from operations before income taxes 18,035 Interest expense 981 ------------------------------------------------------------------------- $19,988 ($972) 19,016 Other Income (72) - (72) Restructuring and other related costs 1,013 691 1,704 ------------------------------------------------------------------------- Adjusted Operating Earnings $20,929 ($281) $20,648 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (i) May not add due to rounding 

 ($ per share) Three months ended March 31, (Unaudited) 2011 2010 ------------------------------------------------------------------------- Basic (loss) earnings per Share $ 0.04 $ 0.51 Restructuring and other related costs(i) 0.60 0.05 ------------------------------------------------------------------------- Adjusted Earnings per Share (ii) $ 0.56 $ 0.56 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (i) Includes per share impact of restructuring and other related costs, net of tax. (ii) May not add due to rounding. Condensed Consolidated Interim Financial Statements (Expressed in Canadian dollars) (Unaudited) CANADA BREAD COMPANY, LIMITED Three months ended March 31, 2011 and 2010 CANADA BREAD COMPANY, LIMITED Consolidated Balance Sheets (In thousands of Canadian dollars) ------------------------------------------------------------------------- As at As at As at As at March 31, March 31, December January 1, (Unaudited) 2011 2010 31, 2010 2010 ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 51,847 $ 68,471 $ 84,401 $ 57,698 Accounts receivable 54,700 119,399 29,773 133,620 Due from Maple Leaf Inc. - 6,740 - - Note Receivable 52,820 - 59,159 - Inventories 52,107 53,383 55,477 56,659 Prepaid expenses and other assets 3,934 4,109 4,516 4,438 Income and other taxes recoverable 6,591 - - - ------------------------------------------------------------------------- $ 221,999 $ 252,102 $ 233,326 $ 252,415 Property and equipment 383,814 369,402 387,603 383,024 Investment property 8,443 3,788 3,743 3,959 Employee benefits 53 345 - - Other long-term assets 993 432 828 390 Deferred tax asset 10,264 7,113 9,543 5,887 Goodwill 261,590 264,197 264,276 267,729 Other intangible assets 12,799 15,196 13,626 16,678 ------------------------------------------------------------------------- Total assets $ 899,955 $ 912,575 $ 912,945 $ 930,082 ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank indebtedness $ - $ 6,167 $ 7,777 $ 4,247 Accounts payable and accruals 179,044 230,224 171,742 237,849 Provisions 20,316 3,969 13,068 3,919 Due to Maple Leaf Foods Inc. 1,021 - 5,336 3,817 Dividends payable 1,525 1,525 1,525 1,525 Income and other taxes payable - 7,313 3,248 13,155 Current portion of long-term debt 2,329 - 2,332 - ------------------------------------------------------------------------- $ 204,235 $ 249,198 $ 205,028 $ 264,512 Long-term debt 1,652 2,311 1,629 2,547 Deferred tax liability 20,916 27,243 24,188 28,063 Employee benefits 37,190 28,767 37,491 28,489 Other long-term liabilities 6,679 6,778 6,240 6,797 ------------------------------------------------------------------------- Total liabilities $ 270,672 $ 314,297 $ 274,576 $ 330,408 ------------------------------------------------------------------------- Shareholders' Equity Share capital $ 142,965 $ 142,965 $ 142,965 $ 142,965 Retained earnings 515,824 473,787 518,315 462,343 Accumulated other comprehensive loss (29,506) (18,474) (22,911) (5,634) ------------------------------------------------------------------------- Total shareholders' equity $ 629,283 $ 598,278 $ 638,369 $ 599,674 ------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 899,955 $ 912,575 $ 912,945 $ 930,082 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Earnings (In thousands of Canadian dollars, except share amounts) ------------------------------------------------------------------------- Three months ended March 31, (Unaudited) 2011 2010 ------------------------------------------------------------------------- Sales $ 371,760 $ 381,932 Cost of goods sold 299,417 306,828 ------------------------------------------------------------------------- Gross margin $ 72,343 $ 75,104 Selling, general and administrative expenses 55,619 54,456 ------------------------------------------------------------------------- (Loss)earnings from operations before the following: $ 16,724 $ 20,648 Restructuring and other related costs (20,050) (1,704) Other income 78 72 ------------------------------------------------------------------------- Earnings from operations before interest and income taxes $ (3,248) $ 19,016 Interest expense 339 981 ------------------------------------------------------------------------- (Loss) earnings from operations before income taxes $ (3,587) $ 18,035 Income taxes (2,621) 5,066 ------------------------------------------------------------------------- Net (loss) earnings $ (966) $ 12,969 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (Loss) earnings per share attributable to common shareholders Basic and diluted (loss) earnings per share $ (0.04) $ 0.51 ------------------------------------------------------------------------- Weighted average number of shares (millions) 25.4 25.4 ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Comprehensive Income (Loss) (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended March 31, (Unaudited) 2011 2010 ------------------------------------------------------------------------- Net (loss) earnings $ (966) $ 12,969 ------------------------------------------------------------------------- Other comprehensive loss Change in accumulated foreign currency translation adjustment (5,490) (12,689) Change in unrealized loss on cash flow hedges (1,105) (151) ------------------------------------------------------------------------- $ (6,595) $ (12,840) ------------------------------------------------------------------------- Comprehensive (loss) income $ (7,561) $ 129 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Changes in Shareholders' Equity (In thousands of Canadian dollars) ------------------------------------------------------------------------- Total accumulated other Total compre- share- Share Retained hensive holders' (Unaudited) capital earnings loss equity ------------------------------------------------------------------------- Balance at January 1, 2010 $ 142,965 $ 462,343 $ (5,634) $ 599,674 Net earnings - 12,969 - 12,969 Other comprehensive income - - (12,840) (12,840) Dividends declared ($0.06 per share) - (1,525) - (1,525) ------------------------------------------------------------------------- Balance at March 31, 2010 $ 142,965 $ 473,787 $ (18,474) $ 598,278 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total accumulated other Total compre- share- Share Retained hensive holders' (Unaudited) capital earnings loss equity ------------------------------------------------------------------------- Balance at January 1, 2011 $ 142,965 $ 518,315 $ (22,911) $ 638,369 Net loss - (966) - (966) Other comprehensive loss - - (6,595) (6,595) Dividends declared ($0.06 per share) - (1,525) - (1,525) ------------------------------------------------------------------------- Balance at March 31, 2011 $ 142,965 $ 515,824 $ (29,506) $ 629,283 ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Consolidated Statements of Cash Flows (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended March 31, (Unaudited) 2011 2010 ------------------------------------------------------------------------- CASH PROVIDED BY (USED IN): Operating activities Net (loss) earnings $ (966) $ 12,969 Add (deduct) items not affecting cash: Depreciation and amortization 12,207 12,712 Deferred income taxes (3,578) (1,956) Income tax current 559 6,025 Interest expense 339 981 Loss (gain) on sale of property and equipment 5 (52) Amortization of terminated interest rate swap - 658 Asset impairments and change in provision for restructuring and other related costs 18,386 1,072 Income taxes paid (9,818) (12,047) Interest paid (277) (1,064) Other (461) (138) Change in non-cash operating working capital (15,531) (1,722) ------------------------------------------------------------------------- Cash provided by operating activities $ 865 $ 17,438 ------------------------------------------------------------------------- Financing activities Dividends paid $ (1,525) $ (1,525) Net increase (decrease) in long-term debt - (236) ------------------------------------------------------------------------- Cash used in financing activities $ (1,525) $ (1,761) ------------------------------------------------------------------------- Investing activities Additions to property and equipment $ (29,557) $ (7,556) Capitalization of interest expense to property and equipment (114) (3) Proceeds from sale of property and equipment 5,039 685 Change in intangible assets 515 - Other - 50 ------------------------------------------------------------------------- Cash used in investing activities $ (24,117) $ (6,824) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents $ (24,777) $ 8,853 Net cash and cash equivalents, beginning of period 76,624 53,451 ------------------------------------------------------------------------- Net cash and cash equivalents, end of period $ 51,847 $ 62,304 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net cash and cash equivalents is comprised of: Cash and cash equivalents $ 51,847 $ 68,471 Bank indebtedness - (6,167) ------------------------------------------------------------------------- Net cash and cash equivalents, end of period $ 51,847 $ 62,304 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CANADA BREAD COMPANY, LIMITED Segmented Financial Information (In thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended March 31, 2011 2010 ------------------------------------------------------------------------- Sales Fresh Bakery $ 255,085 $ 257,189 Frozen Bakery 116,675 124,743 ------------------------------------------------------------------------- $ 371,760 $ 381,932 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings from operations before restructuring and other related costs and other income Fresh Bakery $ 17,985 $ 20,929 Frozen Bakery (1,261) (281) ------------------------------------------------------------------------- $ 16,724 $ 20,648 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital expenditures Fresh Bakery $ 26,157 $ 4,084 Frozen Bakery 3,400 3,472 ------------------------------------------------------------------------- $ 29,557 $ 7,556 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Depreciation and amortization Fresh Bakery $ 6,635 $ 6,810 Frozen Bakery 5,572 5,902 ------------------------------------------------------------------------- $ 12,207 $ 12,712 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- March 31, March 31, December January 1, 2011 2010 31, 2010 2010 ------------------------------------------------------------------------- Total assets Fresh Bakery $ 466,142 $ 455,080 $ 437,976 $ 460,125 Frozen Bakery 353,636 379,599 372,211 408,229 Non-allocated assets 80,177 77,896 102,758 61,728 ------------------------------------------------------------------------- $ 899,955 $ 912,575 $ 912,945 $ 930,082 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Goodwill Fresh Bakery $ 125,892 $ 124,827 $ 125,892 $ 124,827 Frozen Bakery 135,698 139,370 138,384 142,902 ------------------------------------------------------------------------- $ 261,590 $ 264,197 $ 264,276 $ 267,729 ------------------------------------------------------------------------- -------------------------------------------------------------------------