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Press release from CNW Group

George Weston Limited - 2011 Third Quarter Results(1).

Tuesday, November 22, 2011

George Weston Limited - 2011 Third Quarter Results(1).08:00 EST Tuesday, November 22, 2011TORONTO, Nov. 22, 2011 /CNW/ - George Weston Limited (TSX: WN) ("GWL") and its subsidiaries (collectively the "Company") today is announcing its unaudited results for the 16 weeks ended October 8, 2011.The Company's Q3 2011 Quarterly Report to Shareholders, including the Company's interim period condensed consolidated financial statements and Management's Discussion and Analysis ("MD&A") for the 16 and 40 weeks ended October 8, 2011, is available in the Investor Centre section of the Company's website at www.weston.ca and has been filed with the System for Electronic Document Analysis and Retrieval ("SEDAR") and will be available at www.sedar.com.CONSOLIDATED RESULTS OF OPERATIONSGeorge Weston Limited's third quarter 2011 adjusted basic net earnings per common share(2) were $1.44 compared to $1.26 in the same period in 2010, an increase of $0.18. The increase was primarily attributable to the improvement in the operating performance of the Company's two operating segments, Weston Foods and Loblaw Companies Limited ("Loblaw"), and decreases in both net interest expense and other financing charges and income tax expense.         (unaudited)16 Weeks Ended 40 Weeks Ended ($ millions except where otherwise indicated)Oct. 8, 2011 Oct. 9, 2010Change Oct. 8, 2011Oct. 9, 2010ChangeSales$ 10,061$ 9,8262.4%$  24,740$ 24,4721.1%Operating income$ 557$ 49412.8%$ 1,257$ 1,2014.7%Operating margin            5.5%      5.0%             5.1%      4.9% Adjusted operating income(2)$ 507$ 4893.7%$ 1,327$ 1,2813.6%Adjusted operating margin(2)            5.0%      5.0%             5.4%      5.2% Net interest expense and other financing charges$ 94$ 126  (25.4)%$ 258$ 384  (32.8)%Net earnings attributable to shareholders of the Company$ 264$ 17650.0%$ 526$ 34154.3%Basic net earnings per common share ($)$ 1.94$ 1.2654.0%$ 3.81$ 2.3860.1%Adjusted basic net earnings per common share ($)(2)$ 1.44$ 1.2614.3%$ 3.85$ 3.1721.5%Adjusted EBITDA(2)$ 743$ 6976.6%$ 1,901$ 1,7975.8%Adjusted EBITDA margin(2)            7.4%      7.1%             7.7%      7.3%                   Due to the Company's transition to International Financial Reporting Standards ("IFRS" or "GAAP"), effective the first quarter of 2011, all comparative figures that were previously reported in accordance with Canadian Generally Accepted Accounting Principles have been restated to conform with IFRS.As previously noted in the first quarter of 2011, the Company is using three new non-GAAP financial measures: adjusted basic net earnings per common share(2), adjusted operating income(2) and adjusted EBITDA(2). Under GAAP, certain expenses and income must be recognized that are not necessarily reflective of the Company's underlying operating performance. These non-GAAP financial measures exclude the impact of certain items and are used internally when analyzing consolidated and segment underlying operating performance. These non-GAAP financial measures are also helpful in assessing underlying operating performance on a consistent basis. Adjusted operating income(2) and adjusted EBITDA(2) exclude restructuring and other charges, a commodity derivatives fair value adjustment at Weston Foods, foreign currency translation gains and losses, the impact of share-based compensation net of equity derivatives, net insurance proceeds recorded by Weston Foods, a gain related to the sale of a portion of a Loblaw property, and the effect of certain prior years' commodity tax matters at Loblaw. Adjusted basic net earnings per common share(2) also exclude the impact of the accounting for Weston Holdings Limited's ("WHL"), a subsidiary of GWL, forward sale agreement for 9.6 million Loblaw common shares. See the "Non-GAAP Financial Measures" section of this News Release for more information on the Company's non-GAAP financial measures.OPERATING SEGMENTSWeston Foods(unaudited)16 Weeks Ended40 Weeks Ended($ millions)Oct. 8, 2011   Oct. 9, 2010   Oct. 8, 2011   Oct. 9, 2010Sales$ 545 $ 494 $ 1,362$ 1,238Operating income$ 77$ 116$ 151$ 228Operating margin 14.1% 23.5% 11.1% 18.4%Adjusted operating income(2)$ 87$ 85$ 209$ 187Adjusted operating margin(2) 16.0% 17.2% 15.3% 15.1%Adjusted EBITDA(2)$ 105$ 101$ 254$ 227Adjusted EBITDA margin(2) 19.3% 20.4% 18.6% 18.3%         Weston Foods sales in the third quarter of 2011 increased by 10.3% to $545 million, supported by volume growth of 5.7%, compared to the same period in 2010. The acquisition of Keystone Bakery Holdings, LLC and ACE Bakery Ltd. in the third and fourth quarters of 2010, respectively, positively impacted sales growth and volume growth by approximately 10.0% and 7.5%, respectively, while foreign currency translation negatively impacted sales growth by approximately 2.0%. Excluding the acquisitions and foreign currency translation, sales increased by 2.3% due to the positive impact of higher pricing across key product categories of 4.1%, partially offset by a decrease in volume of 1.8%.Weston Foods operating income in the third quarter of 2011 was $77 million compared to $116 million in the same period in 2010 and operating margin was 14.1% compared to 23.5% in the same period in 2010.Weston Foods adjusted operating income(2) was $87 million in the third quarter of 2011 compared to $85 million in the same period in 2010, an increase of 2.4%. Weston Foods adjusted operating margin(2) was 16.0% compared to 17.2% in the same period in 2010. Adjusted operating income(2) was positively impacted by sales growth mainly as a result of higher pricing in key product categories and the bakery acquisitions, and by the benefits realized from productivity improvements and other cost reduction initiatives. These positive impacts were substantially offset in the third quarter by significant increases in commodity and fuel costs, which had a negative impact on adjusted operating income(2) and adjusted operating margin(2) in the third quarter of 2011. Weston Foods adjusted operating income(2) excludes restructuring and other charges, a commodity derivatives fair value adjustment, the impact of share-based compensation net of equity derivatives and net insurance proceeds. See the "Non-GAAP Financial Measures" section of this News Release for more information on the Company's non-GAAP financial measures.Loblaw(unaudited)16 Weeks Ended40 Weeks Ended($ millions)  Oct. 8, 2011   Oct. 9, 2010   Oct. 8, 2011   Oct. 9, 2010Sales$ 9,727 $ 9,535 $ 23,877  $ 23,717Operating income$ 419$ 387$ 1,063$ 1,017Operating margin 4.3% 4.1% 4.5% 4.3%Adjusted operating income(2)$ 420$ 404$ 1,118$ 1,094Adjusted operating margin(2) 4.3% 4.2% 4.7% 4.6%Adjusted EBITDA(2)$ 638$ 596$ 1,647$ 1,570Adjusted EBITDA margin(2) 6.6% 6.3% 6.9% 6.6%         In the third quarter of 2011, Loblaw's continued improvement in execution helped to drive sales while adjusted EBITDA margin(2) and expenses remained on trend. As the infrastructure program progresses, going forward Loblaw expects the related investments to negatively impact operating income. With its initiatives tracking to plan, Loblaw looks forward to the ongoing leadership of its new President, Vicente Trius, who is now firmly established in his role.Loblaw sales in the third quarter of 2011 increased by 2.0% to $9,727 million compared to the same period in 2010. Same-store retail sales growth was 1.3% (2010 - 0.4% decline). Sales growth in food was moderate, sales in drugstore declined marginally, gas bar sales growth was strong, sales in general merchandise, excluding apparel, declined moderately and sales in apparel increased moderately. Loblaw experienced moderate average quarterly internal food price inflation during the third quarter of 2011, which was lower than the average quarterly national food price inflation of 4.9% (2010 - 1.3%) as measured by "The Consumer Price Index for Food Purchased from Stores". In the third quarter of 2010, Loblaw's average quarterly internal food price index was flat. Loblaw sales in the third quarter of 2011 were also positively impacted by an increase in Financial Services segment revenue driven by increased credit card transaction values resulting in higher interchange fee income when compared to the same period in 2010.Loblaw operating income in the third quarter of 2011 increased by 8.3% to $419 million from $387 million in the same period in 2010 and operating margin was 4.3% compared to 4.1% in the same period in 2010.Loblaw adjusted operating income(2) was $420 million in the third quarter of 2011 compared to $404 million in the same period in 2010, an increase of 4.0%. Loblaw adjusted operating margin(2) was 4.3% compared to 4.2% in the same period in 2010. The increase in adjusted operating income(2) and adjusted operating margin(2) was mainly attributable to improved sales, continued labour and other operating cost efficiencies, improved control label profitability, improvements in the performance of Loblaw's investments in franchisees and growth and performance of Loblaw's franchise business, partially offset by increases in promotional pricing programs, foreign exchange losses, the incremental costs related to the investment in information technology and supply chain, increased transportation costs, costs associated with the transition of certain Ontario conventional stores to the more cost effective and efficient operating terms under collective agreements ratified in the third quarter of 2010 and the continued investment in the growth of Loblaw's Financial Services segment. Included in operating income in the third quarter of 2010 were ratification costs associated with the Ontario collective agreements. Loblaw adjusted operating income(2) excludes other charges, the impact of share-based compensation net of equity derivatives and a gain related to the sale of a portion of a property. See the "Non-GAAP Financial Measures" section of this News Release for more information on the Company's non-GAAP financial measures.NET INTEREST EXPENSE AND OTHER FINANCING CHARGES Net interest expense and other financing charges in the third quarter of 2011 decreased by $32 million to $94 million compared to the same period in 2010, primarily due to a $26 million decrease in the non-cash charge related to the fair value adjustment of WHL's forward sale agreement for 9.6 million Loblaw common shares. Excluding the impact of the fair value adjustment, net interest expense and other financing charges in the third quarter of 2011 decreased by $6 million compared to the same period in 2010, primarily as a result of a decrease in interest expense due to the repayment by Loblaw of its $350 million 6.50% Medium Term Note, partially offset by an increase in interest expense as a result of issuances under President's Choice Bank's, a subsidiary of Loblaw, Guaranteed Investment Certificate program.INCOME TAXESThe effective income tax rate decreased to 24.2% in the third quarter of 2011 compared to 32.3% in the same period in 2010. The decrease was primarily due to non-taxable foreign currency translation gains (2010 - non-deductible foreign currency translation losses) recorded in the third quarter of 2011, reductions in the Federal and Ontario Statutory income tax rates and a decrease in income tax expense related to certain prior year income tax matters.OUTLOOK(1)This outlook reflects the underlying operating performance of the Company's operating segments as discussed below.For the remainder of 2011, Weston Foods expects continued sales growth and satisfactory operating performance with earnings reflecting seasonally lower operating margins. Weston Foods will continue to mitigate higher commodity and energy costs through pricing and continued cost reduction initiatives in an effort to achieve full year operating margins in line with those in 2010. Looking ahead to the first half of 2012, higher commodity and input costs are expected to continue to put pressure on operating margins when compared to the same period in 2011.Loblaw remains committed to consistently improve in execution in an increasingly competitive environment. With an ongoing focus on the successful implementation of its information technology and supply chain, Loblaw continues to expect that these investments will negatively impact operating income for the remainder of 2011. Loblaw also expects additional costs associated with the transition of certain Ontario conventional stores under collective agreements and that there may be volatility in earnings with respect to fixed asset impairments. Evaluations of indicators, that may arise in the fourth quarter of 2011, will determine whether any impairment or recovery will be required.George Weston Limited continues to assess opportunities for the deployment of its significant holdings of cash and short term investments.FORWARD-LOOKING STATEMENTSThis News Release for the Company contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects and opportunities. Words such as "anticipate", "expect", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may" and "should" and similar expressions, as they relate to the Company and its management, are intended to identify forward-looking statements. These forward-looking statements are not historical facts but reflect the Company's current expectations concerning future results and events.These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including, but not limited to:changes in economic conditions including the rate of inflation or deflation and changes in interest and foreign currency exchange rates;changes in consumer spending and preferences;heightened competition, whether from new competitors or current competitors;the availability and increased costs relating to raw materials, ingredients and utilities, including electricity and fuel;changes in the Company's or its competitors' pricing strategies;failure of the Company's franchised stores to perform as expected;failure to realize sales growth, anticipated cost savings or operating efficiencies from the Company's major initiatives, including investments in the Company's information technology systems, supply chain investments and other cost reduction initiatives, or unanticipated results from these initiatives;the inability of the Company to successfully implement its infrastructure and information technology components of its plan, including the components of Loblaw's Enterprise Resource Planning system implementation;the inability of the Company's information technology infrastructure to support the requirements of the Company's business;the inability of the Company to manage inventory to minimize the impact of obsolete or excess inventory and to control shrink;failure to execute successfully and in a timely manner the Company's major initiatives, including the implementation of strategies and introduction of innovative and reformulated products or new and renovated stores;unanticipated results associated with the Company's strategic initiatives, including the impact of acquisitions or dispositions of businesses on the Company's future revenues and earnings;the inability of the Company's supply chain to service the needs of the Company's stores;failure to achieve desired results in labour negotiations, including the terms of future collective bargaining agreements which could lead to work stoppages;changes to the legislative/regulatory environment in which the Company operates, including changes to the regulation of generic prescription drug prices and the reduction of reimbursement under public drug benefit plans and the elimination or reduction of professional allowances paid by drug manufacturers;failure to comply with laws and regulations affecting the Company and its businesses;the adoption of new accounting standards and changes in the Company's use of accounting estimates;fluctuations in the Company's earnings due to changes in the value of share based compensation and equity derivative contracts relating to GWL and Loblaw common shares;changes in the Company's income, commodity, other tax and regulatory liabilities including changes in tax laws, regulations or future assessments;reliance on the performance and retention of third-party service providers, including those associated with the Company's supply chain and apparel business;public health events;risks associated with product defects, food safety and product handling;the inability of the Company to collect on its credit card receivables;any requirement of the Company to make contributions to its funded defined benefit pension plans in excess of those currently contemplated;the inability of the Company to attract and retain key executives;supply and quality control issues with vendors; andfailure by the Company to maintain appropriate records to support its compliance with accounting, tax or legal rules, regulations and policies.These and other risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including the Enterprise Risks and Risk Management Section of the MD&A included in GWL's Q3 2011 Quarterly Report to Shareholders and Section 12, "Enterprise Risks and Risk Management", of the MD&A included in GWL's 2010 Annual Report. These forward-looking statements contained herein reflect management's current assumptions regarding these risks and uncertainties and their respective impact on the Company.Other risks and uncertainties not presently known to the Company or that the Company presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this News Release. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.(1)This News Release contains forward-looking information. See Forward-Looking Statements for a discussion of material factors that could cause actual results to differ materially from the conclusions, forecasts and projections herein and of the material factors and assumptions that were applied in presenting the conclusions, forecasts and projections presented herein. This News Release must be read in conjunction with George Weston Limited's filings with securities regulators made from time to time, all of which can be found at www.weston.ca and www.sedar.com.(2)See non-GAAP financial measures.NON-GAAP FINANCIAL MEASURESIn this News Release the Company uses the following non-GAAP financial measures: adjusted operating income and adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin and adjusted basic net earnings per common share. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies, and they should not be construed as an alternative to other financial measures determined in accordance with GAAP.Adjusted Operating Income, Adjusted Operating Margin, Adjusted EBITDA and Adjusted EBITDA MarginThe following tables reconcile adjusted operating income and adjusted EBITDA to GAAP net earnings attributable to shareholders of the Company reported for the periods ended as indicated. Under GAAP, certain expenses and income must be recognized that are not necessarily reflective of the Company's underlying operating performance. These non-GAAP financial measures exclude the impact of certain items and are used internally when analyzing consolidated and segment underlying operating performance. These non-GAAP financial measures are also helpful in assessing underlying operating performance on a consistent basis. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of the items listed in the following tables does not imply that they are non-recurring. Loblaw does not report its results on an adjusted basis, however the Company excludes the impact of the below items, as applicable, when reporting the results of the Loblaw segment.The Company believes adjusted operating income is useful in assessing the Company's underlying operating performance and in making decisions regarding the ongoing operations of its business. The Company believes adjusted EBITDA is also useful in assessing the underlying operating performance of the Company's ongoing operations and in assessing the Company's ability to generate cash flows to fund its cash requirements, including its capital investment program.Adjusted operating margin is calculated as adjusted operating income divided by sales. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by sales. 16 Weeks Ended Oct. 8, 2011Oct. 9, 2010 (unaudited)($ millions) WestonFoods  Loblaw Other(1) Consolidated  WestonFoods Loblaw Other(1) ConsolidatedNet earnings attributable to shareholders of the Company      $264      $176Add impact of the following:                Non-controlling interests       87       73Income taxes       112       119Net interest expense and other financing charges       94       126Operating income (loss)$ 77$419$61$557$116$ 387$ (9)$ 494Add (deduct) impact of the following:                Restructuring and other charges(2) 2     2 (4) 8   4Commodity derivatives fair value adjustment at Weston Foods 4     4 (24)     (24)Foreign currency translation (gains) losses     (61) (61)     9 9Share-based compensation net of equity derivatives 9 15   24 (3) 9   6Net Weston Foods insurance proceeds (5)     (5)        Gain on sale of a portion of a Loblaw property   (14)   (14)        Adjusted operating income$87$420$ $507$85$404$ $489Depreciation and amortization 18 218   236 16 192   208Adjusted EBITDA$105$638$ $743$ 101$ 596$ $697           (1)Operating income in the third quarter of 2011 included a gain of $61 million (2010 - a loss of $9 million) related to the effect of foreign currency translation on a portion of the U.S. dollar denominated cash and short term investments held by Dunedin and certain of its affiliates, which are foreign operations that have the same functional currency as that of the Company.(2)Other charges at Loblaw in the third quarter of 2010 included $8 million as a result of changes in Loblaw's distribution network, including a charge of $3 million due to an asset impairment. 40 Weeks Ended Oct. 8, 2011Oct. 9, 2010 (unaudited)($ millions)  WestonFoodsLoblaw  Other(1) Consolidated  WestonFoods Loblaw  Other(1)    Consolidated Net earnings attributable to shareholders of the Company      $ 526      $ 341Add impact of the following:                Non-controlling interests       220       190Income taxes       253       286Net interest expense and other financing charges       258       384Operating income (loss)$151$ 1,063$ 43$1,257$ 228$ 1,017$ (44)$ 1,201Add (deduct) impact of the following:                Restructuring and other charges(2) 8 31   39 5 52   57Commodity derivatives fair value adjustment at Weston Foods 32     32 (34)     (34)Foreign currency translation (gains) losses     (43) (43)     44 44Share-based compensation net of equity derivatives 23 23   46 (12) 25   13Certain prior years' commodity tax matters at Loblaw   15   15        Net Weston Foods insurance proceeds (5)     (5)        Gain on sale of a portion of a Loblaw property   (14)   (14)        Adjusted operating income$ 209$ 1,118$ $1,327$187$1,094$ $1,281Depreciation and amortization 45 529   574 40 476         516Adjusted EBITDA$ 254$ 1,647$    $ 1,901$ 227$ 1,570$ $ 1,797                 (1)Year-to-date operating income included a gain of $43 million (2010 - a loss of $44 million) related to the effect of foreign currency translation on a portion of the U.S. dollar denominated cash and short term investments held by Dunedin and certain of its affiliates, which are foreign operations that have the same functional currency as that of the Company.(2)Year-to-date other charges at Loblaw included $8 million (2010 - nil) related to an internal realignment of Loblaw's business centered around Loblaw's two primary store formats, Discount and Conventional and $23 million (2010 - $52 million) related to changes in Loblaw's distribution network, including a charge of nil (2010 - $26 million) due to an asset impairment.The year-over-year change in the following items influenced operating income in the third quarter of 2011:Restructuring and other charges  The Company continuously evaluates strategic and cost reduction initiatives related to its store infrastructure, manufacturing assets, distribution networks and administrative infrastructure with the objective of ensuring a low cost operating structure. Restructuring activities related to these initiatives are ongoing. The details of restructuring and other charges are included in the "Reportable Operating Segments" section of the MD&A included in GWL's Q3 2011 Quarterly Report to Shareholders.Commodity derivatives fair value adjustment at Weston Foods Weston Foods is exposed to commodity price fluctuations primarily as a result of purchases of certain raw materials, fuels and utilities. In accordance with the Company's risk management strategy, Weston Foods enters into commodity derivatives to reduce the impact of price fluctuations in forecasted raw material purchases over a specified period of time. These commodity derivatives are not acquired for trading or speculative purposes. These commodity derivatives are not designated for financial reporting purposes as cash flow hedges of anticipated future raw material purchases, and accordingly hedge accounting does not apply. As a result, changes in the fair value of these derivatives, which include realized and unrealized gains and losses related to future purchases of raw materials, are recorded in operating income. During the third quarter of 2011, Weston Foods recorded a charge of $4 million (2010 - income of $24 million), related to the fair value adjustment of exchange traded commodity derivatives that were not designated within a hedging relationship. Despite the impact of accounting for these commodity derivatives on the Company's reported results, the derivatives have the economic impact of largely mitigating the associated risks arising from price fluctuations in the underlying commodities during the period that the commodity derivatives are held.Foreign currency translation gains and losses The impact of foreign currency translation on a portion of the U.S. dollar denominated net assets, primarily cash and short term investments held by Dunedin and certain of its affiliates, which are foreign operations that have the same functional currency as that of the Company, is recorded in operating income. In the third quarter of 2011, a foreign currency translation gain of $61 million (2010 - a loss of $9 million) was recorded in operating income as a result of the depreciation (2010 - appreciation) of the Canadian dollar.Share-based compensation net of equity derivatives  The amount of net share-based compensation cost recorded in operating income is mainly dependent upon the level of fluctuations in the market prices of GWL and Loblaw common shares, the number of unexercised RSUs and their vesting schedules relative to the number of underlying common shares of the equity derivatives. The equity derivatives change in value as the market prices of the respective underlying common shares change and provide a partial offset to fluctuations in share-based compensation expense, including RSU plan expense. The Company manages stock option, RSU plan and equity derivative impacts on a net basis and therefore the impact of stock options is also excluded from operating income when management reviews consolidated and segment operating performance. The third quarter of 2011 year-over-year increase in the share-based compensation net of equity derivatives charge was $18 million and was primarily attributable to changes in the market prices of GWL and Loblaw common shares.Net Weston Foods insurance proceeds  During the third quarter of 2011, Weston Foods received net insurance proceeds of $5 million representing insurance proceeds related to the loss of a Quebec facility, net of charges incurred.Gain on sale of a portion of a Loblaw propertyDuring the third quarter of 2011, Loblaw recorded a gain of $14 million related to the sale of a portion of a property in North Vancouver, British Columbia.Adjusted Basic Net Earnings per Common ShareThe following table reconciles adjusted basic net earnings per common share to GAAP basic net earnings per common share reported for the periods ended as indicated. Under GAAP, certain expenses and income must be recognized that are not necessarily reflective of the Company's underlying operating performance. This non-GAAP financial measure excludes the impact of certain items and is used internally when analyzing consolidated underlying operating performance. This non-GAAP financial measure is also helpful in assessing underlying operating performance on a consistent basis. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of the items listed in the following table does not imply that they are non-recurring. Loblaw does not report its results on an adjusted basis, however the Company excludes the impact of the below items on the Loblaw segment, as applicable, when reporting the Company's consolidated results.The Company believes adjusted basic net earnings per common share is useful in assessing the Company's underlying operating performance and in making decisions regarding the ongoing operations of its business.(unaudited)16 Weeks Ended40 Weeks Ended($)Oct. 8, 2011   Oct. 9, 2010   Oct. 8, 2011   Oct. 9, 2010Basic net earnings per common share     $1.94$1.26$3.81$2.38(Deduct) add impact of the following(1):                    Accounting for WHL's forward sale agreement for 9.6 million Loblaw common shares (0.11) 0.04 (0.19) 0.40Restructuring and other charges 0.02   0.16 0.20Commodity derivatives fair value adjustment at Weston Foods 0.03 (0.14) 0.18 (0.19)Foreign currency translation (gains) losses (0.47) 0.07 (0.33) 0.34Share-based compensation net of equity derivatives 0.12 0.03 0.26 0.04Certain prior years' commodity tax matters at Loblaw     0.05  Net Weston Foods insurance proceeds (0.03)   (0.03)  Gain on sale of a portion of a Loblaw property (0.06)   (0.06)  Adjusted basic net earnings per common share     $1.44$1.26$3.85$3.17         (1) Net of interest, income taxes and non-controlling interests, as applicable.In addition to the items described in the "Adjusted Operating Income, Adjusted Operating Margin, Adjusted EBITDA and Adjusted EBITDA Margin" section above, the year-over-year change in the following item also influenced basic net earnings per common share in the third quarter of 2011:Accounting for WHL's forward sale agreement for 9.6 million Loblaw common shares  WHL recognizes a non-cash charge or income, which is included in consolidated net interest expense and other financing charges, representing the fair value adjustment of WHL's forward sale agreement for 9.6 million shares. The fair value adjustment in the forward contract is a non-cash item resulting from fluctuations in the market price of the underlying Loblaw shares that WHL owns. WHL does not record any change in the market price associated with the Loblaw shares it owns. At maturity, if the forward price is greater than the market price, WHL will receive a cash amount equal to the difference. If the forward price is less than the market price, WHL will pay a cash amount equal to the difference. Any cash paid under the forward contract could be offset by the sale of Loblaw shares. In the third quarter of 2011, income related to the accounting for WHL's forward sale agreement for 9.6 million Loblaw common shares of $0.11 (2010 - a charge of $0.04) per common share was recorded in net interest expense and other financing charges as a result of the decrease (2010 - increase) in the market price of Loblaw common shares.UNAUDITED 2011 THIRD QUARTER CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSISThe Company's unaudited interim period condensed consolidated financial statements and MD&A for the 16 and 40 weeks ended October 8, 2011 are available in the Investor Centre section of the Company's website at www.weston.ca and have been filed with SEDAR and will be available at www.sedar.com.INVESTOR RELATIONSShareholders, security analysts and investment professionals should direct their requests to Mr. Geoffrey H. Wilson, Senior Vice President, Financial Control and Investor Relations, at the Company's Executive Office or by e-mail at investor@weston.ca.Additional financial information has been filed electronically with the Canadian securities regulatory authorities in Canada through SEDAR. This News Release includes selected information on Loblaw Companies Limited, a 62.9%-owned public reporting subsidiary company with shares trading on the Toronto Stock Exchange. For information regarding Loblaw, readers should also refer to the materials filed by Loblaw with the Canadian securities regulatory authorities from time to time. These filings are also maintained at Loblaw's corporate website at www.loblaw.ca.CONFERENCE CALL AND WEBCAST PRESENTATIONGeorge Weston Limited will host a conference call as well as an audio webcast on Tuesday November 22, 2011 at 11:00 a.m. (EST). To access via teleconference please dial (647) 427-7450. The playback will be made available two hours after the event at (416) 849-0833 passcode: 20504138#. To access via audio webcast, please visit the "Investor Centre" section of www.weston.ca. Pre-registration will be available.Ce rapport est disponible en français. For further information: Mr. Geoffrey H. Wilson, Senior Vice President, Financial Control and Investor Relations, at the Company's Executive Office or by e-mail at investor@weston.ca